Morning Star Resources Ltd.

October 23, 2013 17:55 ET

Morning Star Resources Ltd.: Boss's Directors and Officers Again Improperly Appropriate Value From Shareholders; Try to Raise the Dead to Buy Votes

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 23, 2013) - Morning Star Resources Ltd. (the "Concerned Shareholder") today advised shareholders of the inappropriate appropriation of value by a majority of the directors and officers of Boss Power Corp. to the detriment of all of Boss's shareholders.

On October 9, 2013, one day prior to the record date for the upcoming Boss shareholders' meeting, a majority of the incumbent directors and officers of Boss, and seemingly the estate of a deceased director and officer of Boss, inappropriately exercised options to acquire almost 1.6 million shares of Boss at a price of about $0.13 per share. The net cash value per Boss share is expected to be about $0.40 per share after the $30 million settlement with the Province closes (before taxes and settlement of the B claims). Now Boss's insiders who have failed to close the $30 million settlement have appropriated approximately $500,000 (1.6 million x the implied value for Boss share post-settlement) for themselves at the expense of long suffering shareholders. The true value of the appropriation is likely even greater, as Boss will have more cash than merely the settlement proceeds. It is clear that the board is extracting that value for themselves by diluting Boss's existing shareholders. Having not closed the $30 million settlement, the board has done nothing to deserve compensation from Boss. For over 2 years, no value has been created for shareholders, who have seen a tremendous destruction of their investment in Boss. Shareholders haven't seen one penny of the $30 million settlement proceeds. Why do Boss's directors deserve to be compensated?

The inappropriate option exercise is made more egregious by the fact that the board announced today that it will be resigning at the shareholder's meeting. Not only is this a clear admission by the incumbent board of its many shortcomings and conflicts that the Concerned Shareholder has repeatedly told shareholders about, but certain members of the board, who have for years ran Boss as their personal fiefdom, thought it was acceptable to fleece shareholders one more time for $500,000 'on the way out'. Undoubtedly. the proposed cronies of the incumbent directors, who have virtually no share position in Boss, will be looking to do the same thing - issue a slew of options to themselves at depressed prices which reflect the board's inability to close the settlement and not the true value of Boss, all at the expense of existing shareholders.

The timing by Boss's management of the option exercises, one day prior to the record date for Boss's shareholder's meeting, couldn't be more obvious. Clearly, the incumbent board knows that it needs to "buy" more votes to elect its hand-picked successors who will continue to shield the incumbent directors from liability for their breaches of trust. Not even the estate of Randy Rogers, the deceased chief executive officer and director of Boss, was left spared in the board's scheme, which supposedly exercised 450,000 options on the same date. Suspiciously, the Concerned Shareholder has been advised by a current director of Boss (who did not exercise his options) that a fellow board member (Ron Netolitzky) offered to pay for his option exercises. It seems that much more is going on here than shareholder's are being told. The incumbent board seems to be "buying votes" for the meeting to ensure that their hand-picked cronies succeed them in office.


The following table sets forth the option exercises by Boss's directors and officers on October 9, 2013. Paradoxically, it includes the exercise of options by Rupert Allan, the vice-president, exploration, of Boss. As we all know, Boss has not conducted any exploration activities whatsoever for over 5 years:


Number of Options Exercised
Karen Allan, CFO 275,000
Rupert Allan, VP, Exploration 250,000
John Bowles, Director 300,000
Ron Netolitzky, acting CEO and director 300,000
Estate of Randy Rogers, former President and CEO 450,000



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