Liquor Stores N.A. Ltd.
TSX : LIQ

Liquor Stores N.A. Ltd.

June 08, 2017 06:00 ET

Liquor Stores N.A. Ltd: ISS Recommends Shareholders Vote Only the WHITE Management Proxy

ISS Advises That the Dissident's Plan Appears to Be Inferior to the Company's

EDMONTON, ALBERTA--(Marketwired - June 8, 2017) - Liquor Stores N.A. Ltd. (the "Company" or "Liquor Stores") (TSX:LIQ), North America's largest publicly traded liquor retailer, announced today that Institutional Shareholder Services Inc. ("ISS") recommends that shareholders vote ONLY the WHITE management proxy in a contested election for the Board of Directors. "The dissident's proposed strategic plan appears to be inferior to the Company's," said ISS.

Shareholders cannot vote both the management and dissident proxies. Liquor Stores agrees with ISS' advice that shareholders should vote ONLY the WHITE management proxy and not cast votes on the dissident proxy. ISS, a leading independent international corporate governance analysis and proxy advisory firm, advises AGAINST voting the dissident proxy because shareholders will suffer if the dissident takes control of the board.

"We welcome the unbiased recommendation of ISS, and encourage shareholders to weigh its advice accordingly," said Jim Dinning, Chairman of Liquor Stores. "Like ISS, we strongly recommend that shareholders vote the WHITE proxy to support the future value of their investment in Liquor Stores."

In recommending that its clients vote the WHITE management proxy, ISS makes the following points:

  • Liquor Stores has a "preferable differentiating strategy to attract customers and to improve the company's competitive position in the long run."
  • The dissident has a "simplistic view of the market" that "seems to disregard the complexity of the real world (e.g., high level of competitiveness in the company's core market - Alberta - with its fully private retail liquor operations)."
  • The dissident's "plan does not appear to be suitable to tackle the high level of competitiveness in the company's market."
  • "The "Just-in-time" inventory strategy, which is preferred by the dissident, might erode the company's competitive position due to inability to handle big orders of private label products and, in the long-run, might lead to loss of clients when the company's assortment converges with competitors' offerings."
  • "Due to significant differences between Alberta private liquor retailing operations and the other provinces where government-owned entities control a majority of the market," there is only "limited value" to the dissident's attempt to compare Liquor Stores to government-owned operations.
  • The majority of the Liquor Stores incumbent board members have "meaningful equity stakes in the company" but "out of six dissident nominees only one has a meaningful ownership."

Liquor Stores agrees with much of the analysis provided by ISS. However, Liquor Stores respectfully disagrees with a contradictory ISS recommendation to vote for two of the six dissident nominees. It is impossible for retail shareholders to split the vote in this way and it is also dangerous, given that the two noted dissident nominees are the authors of the strategy that ISS discredits. Shareholders should vote the WHITE proxy for all eight management nominees in order to protect the value of their investment in Liquor Stores.

Liquor Stores Tells Retail Shareholders: Your Vote Counts

Liquor Stores has initiated a plan to ensure that all shareholders have the benefit of the ISS recommendation. The Company will form a soliciting dealer group that will compensate brokers for time spent alerting clients to the importance of voting the white proxy to protect the future value of their investment in Liquor Stores.

Mr. Dinning said, "The Board takes seriously its fiduciary duty to look out for the best interests of the company and its shareholders. We share ISS' view that our plan will improve the company's competitive position in the long run and that PointNorth's plan is unsuitable for our competitive markets. Our retail shareholders need to know that the value of their investment in Liquor Stores is at risk under PointNorth. However, the current Canadian proxy system makes it impossible for us to communicate directly with the 49% of our shareholders who hold their shares in their brokers' name."

"The arrangement we have put in place addresses this critical problem with the Canadian proxy system. The soliciting dealer arrangement exists to ensure that shareholder democracy functions for small shareholders as well as the larger institutions. The June 20 Annual Meeting represents a critical turning point for the future of Liquor Stores. We urge all shareholders, no matter how small their share ownership, to vote their proxy and be sure their voice is heard."

Vote the WHITE proxy for Liquor Stores' nominees

Liquor Stores urges shareholders to read its May 25 Letter to Shareholders and Management Information Circular, available on the Liquor Stores website at http://www.liquorstoresna.ca/investors and under the Liquor Stores profile at www.sedar.com. The documents highlight how PointNorth will destroy value at Liquor Stores and how the current Board and management is creating value. Liquor Stores recommends that shareholders vote the WHITE proxy for the Board's eight experienced and qualified incumbent nominees. Vote today.

Meeting Details

Shareholders are advised to vote only the WHITE form of proxy today, or no later than 10:00 a.m. (Mountain Time) or Noon (Eastern Time) on Friday, June 16, 2017. The record date for the Annual Meeting was the close of business on April 21, 2017 (the "Record Date"). All registered shareholders of record as at the Record Date are invited to attend the Meeting which is taking place at Meeting Place 1 at the Hyatt Place Edmonton-West located at 18004 100 Ave NW, Edmonton, Alberta, on Tuesday, June 20, 2017, at 10:00 a.m. (Edmonton time).

If shareholders have any questions or require any assistance in executing your proxy or voting instruction form, please call D.F. King Canada at:

· North American Toll Free Number: 1-800-301-9627
· Outside North America, Banks, Brokers and Collect Calls: 1-201-806-7301
· Email: inquiries@dfking.com
· North American Toll Free Facsimile: 1-888-509-5907
· Facsimile: 1-647-351-3176

ABOUT LIQUOR STORES N.A. LTD.

The Company operates 251retail liquor stores in Alberta, British Columbia, Alaska, Kentucky, New Jersey, and Connecticut. Liquor Stores' retail brands include: Liquor Depot, Liquor Barn, and Wine and Beyond in Alberta (177stores); Liquor Depot and Liquor Barn in British Columbia (34 stores); Brown Jug in Alaska (22 stores); Liquor Barn "The Ultimate Party Source" and Liquor Barn Express in Kentucky (15 stores), Joe Canals Discount Outlet in New Jersey (2 stores), and LQR MKT in Connecticut (one store). The Company's common shares and convertible subordinated debentures trade on the Toronto Stock Exchange under the symbols "LIQ" and "LIQ.DB.B", respectively.

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements or information (collectively "forward‐looking statements") within the meaning of the "safe harbour" provisions of applicable securities legislation. All statements and information other than statements of historical fact contained in this press release are forward‐looking statements. In particular, this press release contains forward‐looking statements with respect to among others: the anticipated outcomes of PointNorth's actions and strategy for Liquor Stores and the potential consequences to Liquor Stores and its business of the election of PointNorth's director nominees and the implementation of its strategy; and matters with respect to the upcoming Meeting, including the scheduled date and time of the Meeting and the cut off time for voting. Forward‐looking statements reflect our current plans, intentions, and expectations, which are based on management's perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate in the circumstances. Our plans, intentions, and expectations are inherently subject to significant business, economic, competitive and other uncertainties and contingencies regarding future events and as such, are subject to change. There is no assurance that the plans, intentions, or expectations upon which these forward‐looking statements are based will occur. Forward-looking statements are subject to risks, uncertainties and assumptions, including, but not limited to, those discussed elsewhere in this press release and our other filings made with Canadian securities regulatory authorities and available on SEDAR at www.sedar.com. Although Management believes that the expectations represented in such forward-looking statements are reasonable there can be no assurance that such expectations will prove to be correct and such forward‐looking statements should not be unduly relied upon.

Some of the factors that could affect future results and could cause results to differ materially from those expressed in the forward-looking statements contained herein include, but are not limited to: risks relating to government regulation and changes thereto (whether by court decisions, citizen referenda, or otherwise); competition; the state of the economy including general economic conditions in Canada (including Alberta) and the U.S.; the unpredictability and volatility of Liquor Stores' common share price; restrictions on potential growth; availability of sufficient financial resources to fund the Company's capital expenditures; changes in commodity tax rates and government mark‐ ups; risks relating to future acquisitions and development of new stores; the ability of management to execute the Company's business and strategic plans; Liquor Stores' ability to locate and secure acceptable store sites and to adapt to changing market conditions; poor weather conditions; dependence on key personnel; labour costs, shortages and labour relations including Liquor Stores' ability to hire and retain staff at current wage levels and the risk of possible future unionization; supply interruption or delays; dependence on suppliers; reliance on information and control systems; income tax changes; leverage and restrictive covenants in agreements relating to current and future indebtedness of Liquor Stores; and credit risks arising from operations. These factors should not be construed as exhaustive. The information contained in this press release, and as disclosed in other filings made by the Company with Canadian securities regulatory authorities and available on SEDAR at www.sedar.com, identifies additional factors that could affect the operating results and performance of Liquor Stores.

Readers are cautioned that this list of risk factors should not be construed as exhaustive. The forward‐looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this press release are made as of the date hereof and Liquor Stores assumes no obligation to update or revise them to reflect new events or circumstances except as expressly required by applicable securities law.

Contact Information

  • Liquor Stores N.A. Ltd. - Investors:
    Matthew Rudd
    Senior Vice President and Chief Financial Officer
    (780) 702-7389
    www.liquorstoresna.ca

    Media:
    Louise Kozier
    Longview Communications
    (604) 694 6033