Amir Mousavi

December 15, 2010 13:15 ET

RPT Resources Inc.'s Dissident Shareholder Seeks Court Injunction

TORONTO, ONTARIO--(Marketwire - Dec. 15, 2010) - RPT Resources Inc.'s ("RPT") Management has announced a private placement financing of subscription receipts to "fund the exploration and development program of ArPetrol Inc." following the completion of their proposed business combination. "It seems that RPT Management has decided that they should spend a significant amount of the company's capital in a proposed transaction that shareholders have yet to approve. The costs attributed to the marketing of the financing, the legal costs of the financing, the guaranteed funds owed to the underwriting syndicate and as per RPT's press release interest on the private placement funds would all be burned if RPT's shareholders vote down the proposed business combination," stated Dissident Shareholder, Amir Mousavi. "The growing number of Concerned Shareholders that have made me their proxy are completely against this business combination with ArPetrol."

Recently a Concerned Shareholder of RPT has advised the Dissident Shareholder that a member of RPT's Management called and advised the Concerned Shareholder that their group had a massive block of voting shares. The member also advised the Concerned Shareholder that he will not be invited to participate in a $15.5 million private placement financing that will occur at a price of $0.13 concurrent with the business combination unless he gives RPT's Management his support via voting shares. RPT's last trading price was $0.17, therefore the $0.13 per share financing is a 24% discount to RPT's last closing price. "This is a terrible under valuation of RPT's assets and basically writes off any value associated to RPT's mineral properties which RPT's management valued at $13.9 million in its latest annual audited and quarterly unaudited financial statements," states Mr. Mousavi.

RPT President, Michelle Gahagan ("Gahagan") certified, on October 28, 2010 in regards to the latest RPT audited financial statements and November 29, 2010 for the latest RPT unaudited quarterly financial statements, the following statement to RPT Shareholders and the Ontario Securities Commission via SEDAR:

"Based on my knowledge, having exercised reasonable diligence, the annual (and interim) financial statements together with the other financial information included in the annual (and interim) filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the annual (and interim) filings."

"If Gahagan certified on November 29, 2010 that the RPT's mineral properties were valued at $13.9 million, cash and short term investments were valued at $13 million and shareholders' equity was valued at $27.0 million, why is RPT's Management giving the assets of RPT away to ArPetrol at a pre-financing valuation of $15 million ($0.13 per share)", asks Mr. Mousavi. Notably, most concerned shareholders that have contacted the dissident shareholder have indicated their average price is north of $0.20.

Furthermore, the Concerned Shareholder has advised the Dissident Shareholder that he has been contacted by a number of individuals who have been representing RPT in regards to RPT's proposed business combination with ArPetrol. Mr. Glenn Olnick ("Olnick"), a director of Torch River Agricultural Corp., advised the Concerned Shareholder that their group had a majority of votes in regards to the shareholder meeting that RPT's Management cancelled. At a later time, another person, this time a Director of both eShippers and Torch River Agricultural Corp., Mr Wayne Tisdale ("Tisdale") called the Concerned Shareholder and offered to set up a meeting with RPT President, Ms. Michelle Gahagan and Mr. Tim Thomas ("Thomas"), ArPetrol's future President to discuss the potential business combination. The Concerned Shareholder has been in contact with Tisdale and Olnick in the past and they indicated that they were representing RPT. "It seems that non official RPT representatives are soliciting RPT shareholders who had previously appointed me as their proxy for the recently cancelled shareholder meeting. It appears that they have been successful with their delay tactic to buy time and solicit shareholders who support me for when RPT's Management decides it is time to reconvene the shareholder meeting," advised Amir Mousavi. 

RPT's website does not disclose Tisdale or Olnick as management or employees of RPT, although it seems that the website has not been updated since 2009. Tisdale or Olnick have not disclosed themselves as insiders on (the System For Electronic Disclosure for Insiders), albeit they sit on common boards, management teams and in some instances, share the same office space with RPT's Management. On the TSX Venture website it indicates that Gahagan is a director of eShippers along with Tisdale. On the website for Torch River Agricultural Corp. it states Gahagan as a Director along with Tisdale and Olnick. The Dissident Shareholder has received the NOBO shareholder list for RPT and Tisdale and Olnick have an interest in RPT by either share ownership of family members or share ownership by companies that they control including Galloway Financial Services, Inc. a Barbados based company. "If Tisdale and Olnick are just shareholders of RPT as am I, why do these two individuals have access to non-public information on this proposed business combination and why are they contacting the shareholders who support me to solicit their votes? Why are they trying to organize meetings with shareholders who support me, to meet in conjunction with Gahagan and Thomas to discuss the transaction?" asks Mr. Mousavi.

In the press release from RPT dated December 3, 2010, Gahagan was touted as being a principal in a privately held merchant bank based in Vancouver and London and that she has extensive experience advising companies with respect to M&A. Gahagan recently sent an email to another RPT Shareholder in regards to a conversation she had with him about the proposed business combination. The email was signed Michelle Gahagan, Managing Director, Intrepid Financial. According to Gahagan's LinkedIn profile, she is an owner of a merchant bank called Providia. Posted on the Intrepid Financial's website is the following statement:

"We currently have $60m of cash and liquid assets within the stable of Intrepid companies and ready access to further capital. Our preferred investment profile is $3m-$10m, a board seat and significant influence." Intrepid Financial further discloses that their approach includes their use of TSX shells. On another page of the same website, it displays RPT's name and logo. "Who is Gahagan representing when talking with RPT shareholders? Is she representing Providia, Intrepid or RPT? Given the value Gahagan associates to RPT's $13.8 million in mineral properties, is Gahagan treating RPT as just another one of Intrepid's shell companies?" asks Mr. Mousavi.

The Dissident Shareholder had collected 97 proxies which appointed the Dissident Shareholder as proxy for the shareholder meeting up to the date that RPT's Management initiated its delay tactic by calling off the shareholder meeting. Since launching the dissident shareholder proxy, the Dissident Shareholder has received several calls and has verbal commitments from numerous other shareholders that were planning to support him at the shareholder meeting. "A common theme exists amongst the shareholders that have contacted me. All are very disappointed with management's inability to invest the company's assets over the past 3 years and their significant capital depreciation," states Mr. Mousavi. The Dissident Shareholder again reiterates that if the proposed business combination was not a delay tactic, then why did management not include the business combination proposal in their planned shareholder meeting as they had been working on the transaction for some time and why did they pay all the costs associated with a shareholder meeting when they were aware that they would need shareholder approval for a business combination? "RPT's representatives have since begun discussing a $15.5 million private placement financing at $0.13, which is a significant discount to the current share price, with a Concerned Shareholder, which supports my assumption made on my November 26, 2010 press release that a dilutive financing would be required for the combined entities to have $25 million in cash. Shouldn't RPT Management's statement in their press release for the business combination with ArPetrol have stated that 'after a required financing' the combined cash of the amalgamated company would be in excess of $25,000,000?" asked Amir Mousavi. 

The previous failed business combination of ArPetrol and PetroGlobe raises a clear "Red Flag", as several investment banks attempted to raise the required capital to complete the transaction. Participating were Canaccord Genuity Corp., Thomas Weisel Partners Canada Inc., Haywood Securities Inc., Cormark Securities Inc. and FirstEnergy Capital Corp. In a news release issued on August 11th 2010 by PetroGlobe addressing the failed business combination the company states "an integral part of the transaction was a $20 million equity private placement. Despite extensive efforts by PetroGlobe, ArPetrol and the placing agents, the private placement could not be completed". "With five investment banks working on this proposed business combination for several months, they were still unsuccessful," states Mr. Mousavi. "Why would RPT's Management and decision makers force RPT shareholders into this Argentinean oil and gas deal that the investment community rejected only 6 months ago and during a period of incredible appetite for commodity investing?" asks Mr. Mousavi who is registered as Investment Council and Portfolio Manager with the Ontario Securities Commission.

On November 25, 2010, Alexander Mining plc, parent company of MetaLeach who receives a consulting fee of $25,000 per month from RPT, made the following announcement:

"The Company has noted the recent TSXV announcement of a possible business combination between RPT Resources Ltd. ("RPT") and a private oil and gas company, which, if consummated, may lead to RPT becoming solely engaged in oil and gas exploration. The Company has a commercial agreement with RPT to develop mining projects with MetaLeach's Proprietary Leaching Technologies. An extension to this agreement, on a rolling basis, was announced in September. The Company has been advised by RPT director Michelle Gahagan that RPT currently has no intention of giving notice terminating the consultancy agreement with Alexander's MetaLeach subsidiary."

"Why would RPT's Management burn the capital of RPT and continue to payout this $300,000 annualized fee to MetaLeach even though they are planning a business combination with another company?" asked Amir Mousavi. 

The previous failed business combination of ArPetrol and PetroGlobe also had a non-completion fee of up to $1,500,000. Legal and due diligence costs associated with the preparation of the proposed business combination will be substantial as both sides have hired third party consultants to advise on the proposed business combination. Legal and marketing costs associated with the required private placement financing will be substantial. "The shareholders who support me remain in support of a change in management and against this business combination. A dissident shareholder proxy was filed to restructure the management team and RPT's Management has used this business combination as a delay tactic to avoid a shareholder vote," advised Amir Mousavi. "This business combination only seeks to dilute the voices and votes of the concerned shareholders that have made me their proxy and agree that there has to be a change in RPT's management".

"I am in the process of filing a court injunction to stop this issuance of more RPT shares, this business combination and will ask for the immediate recommencement of the Annual General Meeting" stated Mr. Mousavi.

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