Riot Issues Open Letter to Fellow Bitfarms Shareholders Ahead of Upcoming Special Meeting
Riot Platforms, Bitfarms' largest shareholder with a 19.9% stake, has issued an open letter to fellow Bitfarms shareholders ahead of the October 29 special meeting. Riot criticizes Bitfarms' governance and recent actions, including board changes and the proposed Stronghold Digital Mining acquisition. Riot has reduced its proposed slate of new directors from three to two: Amy Freedman and John Delaney.
Riot argues that Bitfarms' recent board changes have been reactive and insufficient, citing examples of the board's defensive posture such as a failed off-market poison pill and a unilateral board refresh. The letter expresses concern over the Stronghold acquisition's timing and price, viewing it as potentially entrenching the current board.
Riot urges Bitfarms to halt defensive tactics and allow shareholders to be heard at the upcoming meeting, warning against any financing transactions that could be dilutive to shareholders.
Riot Platforms, il maggiore azionista di Bitfarms con una quota del 19,9%, ha inviato una lettera aperta agli altri azionisti di Bitfarms in vista della riunione straordinaria del 29 ottobre. Riot critica la governance di Bitfarms e le recenti azioni, inclusi i cambiamenti nel consiglio e la proposta di acquisizione di Stronghold Digital Mining. Riot ha ridotto la sua lista proposta di nuovi direttori da tre a due: Amy Freedman e John Delaney.
Riot sostiene che i recenti cambiamenti nel consiglio di Bitfarms siano stati reattivi e insufficienti, citando esempi della postura difensiva del consiglio, come un fallito pillola avvelenata off-market e un rinnovamento unilaterale del consiglio. La lettera esprime preoccupazione per il tempismo e il prezzo dell'acquisizione di Stronghold, considerandola potenzialmente un modo per consolidare l'attuale consiglio.
Riot esorta Bitfarms a fermare le tattiche difensive e a permettere agli azionisti di essere ascoltati nella prossima riunione, avvertendo contro qualsiasi transazione di finanziamento che potrebbe diluire gli azionisti.
Riot Platforms, el mayor accionista de Bitfarms con una participación del 19,9%, ha enviado una carta abierta a los demás accionistas de Bitfarms antes de la reunión especial del 29 de octubre. Riot critica la gobernanza de Bitfarms y las acciones recientes, incluidos los cambios en la junta y la propuesta de adquisición de Stronghold Digital Mining. Riot ha reducido su lista de nuevos directores propuestos de tres a dos: Amy Freedman y John Delaney.
Riot argumenta que los cambios recientes en la junta de Bitfarms han sido reactivos e insuficientes, citando ejemplos de la postura defensiva de la junta, como una fallida píldora envenenada fuera del mercado y un refresco unilateral de la junta. La carta expresa preocupación por el momento y el precio de la adquisición de Stronghold, viéndola como potencialmente un medio para afianzar a la junta actual.
Riot insta a Bitfarms a detener las tácticas defensivas y permitir que los accionistas sean escuchados en la próxima reunión, advirtiendo contra cualquier transacción de financiación que pueda diluir a los accionistas.
라이엇 플랫폼스, 비트팜스의 최대 주주로 19.9% 지분을 보유하고 있는 회사가 10월 29일 특별 회의를 앞두고 다른 비트팜스 주주들에게 공개 서한을 보냈습니다. 라이엇은 비트팜스의 거버넌스와 최근 조치, 이사회 변화 및 스트롱홀드 디지털 마이닝 인수 제안을 비판했습니다. 라이엇은 제안한 신규 이사 후보를 세 명에서 두 명으로 줄였으며, 에이미 프리드먼과 존 델라니가 포함되었습니다.
라이엇은 비트팜스의 최근 이사회 변화가 반응적이고 불충분했다고 주장하며, 실패한 비상식적 독소조항과 단독 이사회 새로 고침과 같은 이사회의 방어적 자세의 사례들을 인용했습니다. 이 서한은 스트롱홀드 인수의 시기와 가격에 대한 우려를 표명하며, 현재 이사회를 강화할 가능성이 있다고 보고 있습니다.
라이엇은 비트팜스가 방어 전술을 중단하고 오는 회의에서 주주들이 의견을 낼 수 있도록 해야 한다고 촉구하며, 주주들에게 희석될 수 있는 금융 거래를 경계하도록 경고합니다.
Riot Platforms, le plus grand actionnaire de Bitfarms avec une participation de 19,9 %, a envoyé une lettre ouverte aux autres actionnaires de Bitfarms avant la réunion spéciale du 29 octobre. Riot critique la gouvernance de Bitfarms et les actions récentes, y compris les changements au sein du conseil d'administration et la proposition d'acquisition de Stronghold Digital Mining. Riot a réduit sa liste proposée de nouveaux directeurs de trois à deux : Amy Freedman et John Delaney.
Riot soutient que les récents changements au conseil d'administration de Bitfarms ont été réactifs et insuffisants, citant des exemples de la posture défensive du conseil, comme un échec d'une pilule empoisonnée hors marché et un renouvellement unilatéral du conseil. La lettre exprime des inquiétudes quant au moment et au prix de l'acquisition de Stronghold, la considérant comme une manière de maintenir le conseil actuel.
Riot exhorte Bitfarms à cesser les tactiques défensives et à permettre aux actionnaires d'être entendus lors de la prochaine réunion, mettant en garde contre toute transaction de financement qui pourrait diluer les actionnaires.
Riot Platforms, der größte Aktionär von Bitfarms mit einem Anteil von 19,9%, hat einen offenen Brief an die anderen Bitfarms-Aktionäre im Vorfeld der Sondersitzung am 29. Oktober veröffentlicht. Riot kritisiert die Unternehmensführung von Bitfarms und die jüngsten Maßnahmen, einschließlich der Veränderungen im Vorstand und der vorgeschlagenen Übernahme von Stronghold Digital Mining. Riot hat seine vorgeschlagene Liste neuer Direktoren von drei auf zwei reduziert: Amy Freedman und John Delaney.
Riot argumentiert, dass die jüngsten Änderungen im Vorstand von Bitfarms reaktiv und unzureichend waren und führt Beispiele für die defensive Haltung des Vorstands an, wie eine gescheiterte Off-Market-Giftpille und eine einseitige Erneuerung des Vorstands. Der Brief äußert Bedenken hinsichtlich des Zeitpunkts und des Preises der Übernahme von Stronghold und sieht dies als potenzielle Festigung des aktuellen Vorstands.
Riot fordert Bitfarms auf, defensive Taktiken zu stoppen und den Aktionären zu ermöglichen, bei der bevorstehenden Sitzung Gehör zu finden, und warnt vor Finanzierungsvereinbarungen, die die Aktionäre verwässern könnten.
- Riot's campaign has resulted in some board changes at Bitfarms, including the resignation of two co-founders
- Riot's reduced slate of nominees brings public company board experience and corporate governance expertise
- Bitfarms' governance is described as 'broken' by its largest shareholder
- The proposed Stronghold acquisition is criticized for its high premium and questionable timing
- Bitfarms is accused of prioritizing board entrenchment over shareholder interests
- Concerns raised about potential dilutive financing transactions by Bitfarms
Insights
This open letter from Riot to Bitfarms shareholders highlights significant governance issues at Bitfarms. The reduction of Riot's proposed slate from three to two nominees indicates a strategic shift in response to recent board changes. However, the letter's tone suggests that these changes are insufficient and reactive.
Key concerns include the invalidated poison pill, unilateral board appointments and the questionable Stronghold acquisition. The
This situation exemplifies the challenges of balancing founder influence with shareholder interests in public companies. The upcoming special meeting on October 29 will be important in determining Bitfarms' governance future.
The proposed Stronghold acquisition is a significant concern. The
Several red flags emerge:
- The timing of the announcement, just before a important shareholder meeting
- Lack of details on necessary capital expenditures for site development
- The fact that no other industry players were willing to pay such a high price during Stronghold's public strategic review
Riot's open letter reveals a contentious relationship between Bitfarms' largest shareholder and its board, highlighting key shareholder rights issues. The invalidation of Bitfarms' poison pill by the Ontario Capital Markets Tribunal is a significant win for shareholder rights, preventing potential value destruction.
Riot's reduction of its proposed slate from three to two nominees demonstrates a measured approach to board refreshment. However, the lack of engagement from Bitfarms' board and unilateral appointment of new directors without consulting major shareholders are concerning practices that undermine shareholder democracy.
The upcoming special meeting on October 29 will be a critical test of shareholder rights at Bitfarms. Shareholders should carefully consider their voting options to ensure their interests are adequately represented in the boardroom.
Details the Need for Further Change at Bitfarms in Order to Fix Broken Governance and Enhance Value for All Shareholders
Reduces Proposed Slate of New Directors From Three to Two in Light of Bitfarms’ Recent Moves in Response to Public Pressure from Riot
Warns Bitfarms Not to Take Any Additional Actions to Entrench the Existing Board Prior to the October 29 Special Meeting
Additional Information Available at www.ABetterBitfarms.com
Dear Fellow Bitfarms Shareholders,
Riot currently owns approximately
Further Board Change Is Needed
Our focus remains on fixing Bitfarms’ broken governance to enhance value for all shareholders. In order to achieve this objective, additional fresh perspectives are required in Bitfarms’ boardroom.
Since we initiated our campaign, two of Bitfarms’ three co-founders – Emiliano Grodzki and Nicolas Bonta – have resigned from the Bitfarms Board. Notably, Mr. Grodzki only resigned after shareholders voted not to re-elect him by a significant margin at Bitfarms’ May 31, 2024 annual and special meeting of shareholders. Bitfarms subsequently appointed Fanny Philip to replace Mr. Grodzki, appointed Ben Gagnon as Chief Executive Officer and a member of the Bitfarms Board to replace Mr. Bonta, and made other executive leadership changes.
While these changes represent a step in the right direction, they have been reactive and insufficient to address Bitfarms’ broken governance. These actions followed Riot’s sustained public pressure and would not have occurred had Riot not challenged the entrenchment of the Bitfarms Board. The evidence is clear: Bitfarms needs additional truly independent directors with the experience and expertise to ensure that decisions about the Company’s strategy moving forward reflect what is best for all shareholders – not just what is best for legacy directors whose focus is maintaining their own positions.
Consider the following examples of the Bitfarms Board’s defensive posture and prioritizing entrenchment over engagement:
-
Bitfarms’ failed off-market poison pill: The unilateral adoption of a shareholder rights plan (the “Poison Pill”) with a
15% threshold ran counter to established legal and governance standards. This entrenching Poison Pill was rightfully invalidated and cease traded by the Ontario Capital Markets Tribunal in response to Riot’s application. Had Riot not acted, the Poison Pill would have prejudiced all Bitfarms’ shareholders and set a damaging precedent for the Canadian capital markets. The Bitfarms Board knew better but disregarded these concerns.
- A unilateral Board refresh: On June 27, 2024, Bitfarms announced the addition of Fanny Philip to the Bitfarms Board. Bitfarms chose to make this appointment without consulting Riot, its largest shareholder, even though the Bitfarms Board knew that we had proposed a slate of highly qualified director nominees and specifically asked that we be consulted before any board changes were made.
-
The concerning Stronghold acquisition announcement: Shareholders should seriously question the timing of Bitfarms’ announcement of its agreement to acquire Stronghold, notwithstanding the pending Special Meeting, and the price that it was willing to pay. The
US transaction (including$175 million US of assumed debt) represents a greater than$50 million 100% premium to Stronghold’s closing share price on the day prior to the announcement, which greatly exceeds the premiums of precedent all-stock transactions in which sellers participate in any potential upside. Moreover, while announced as a “highly accretive” transaction with “compelling economics,” shareholders have not yet been provided an estimate of capital expenditures that will be required to fund the development of Stronghold’s sites. These points are especially troubling given that Stronghold was effectively “for sale” for a significant period of time, with its strategic review process publicly announced earlier this year, and clearly no other participant in the sector was willing to pay such an inflated price. As Bitfarms’ largest shareholder, we are concerned that the Bitfarms Board did not enter into this transaction with the best interests of Bitfarms’ shareholders in mind. Based on the transaction terms, the Stronghold acquisition appears to be yet another action designed to entrench the Bitfarms Board.
- A continued lack of engagement with Riot: We have still seen no change in posture from the Bitfarms Board regarding its willingness to work constructively with Riot to consider beneficial changes to the Bitfarms Board and/or a mutually beneficial combination that could maximize value for all Bitfarms shareholders.
The Path Forward – Electing Riot’s Nominees
Previously, we announced that we would nominate three independent and highly qualified nominees for election to the Bitfarms Board at the Special Meeting. With the resignations of Messrs. Bonta and Grodzki, our campaign to fix Bitfarms’ broken governance has already resulted in progress towards addressing the founder-led culture that we believe has been harmful to the Bitfarms Board.
As a result, we will be reducing our proposed slate of new directors from three to two – Amy Freedman and John Delaney (the “Nominees”). Both Nominees are fully independent of Riot and Bitfarms and will bring much needed public company board experience, corporate governance oversight, transaction experience and business expertise to the Bitfarms Board. We will be running the Nominees to replace two Bitfarms directors: co-founder Andres Finkielsztain and Fanny Philip. In particular, Mr. Finkielsztain, as one of the three co-founders, bears responsibility for, among other things, Bitfarms’ botched CEO succession process that led to it having five CEOs in five years.
Bitfarms Needs to Halt its Defensive Tactics and Let Shareholders Be Heard
With the Special Meeting less than two months away, we sincerely hope that Bitfarms will allow its shareholders to have their say, and will not seek to take any steps that adversely affect investors or that are intended to gain an unfair advantage in the director election. Specifically, the Bitfarms Board should not enter into any financing transaction prior to the completion of the Special Meeting. Riot is deeply concerned that any transaction the current Bitfarms Board will pursue will be punitively dilutive to all Bitfarms’ shareholders when there are other more attractive financing options available. If the Bitfarms Board insists on taking any such action to further entrench itself at the expense of shareholders, Riot will not hesitate to hold the incumbent directors personally accountable.
***
We look forward to mailing our solicitation materials and giving shareholders a chance to vote for our two Nominees in the near future. We are confident that, together, we can help ensure a Better Bitfarms moving forward.
Yours sincerely,
Benjamin Yi, Executive Chairman
Jason Les, Chief Executive Officer
***
About Riot Platforms, Inc.
Riot’s (NASDAQ: RIOT) vision is to be the world’s leading Bitcoin-driven infrastructure platform. Our mission is to positively impact the sectors, networks and communities that we touch. We believe that the combination of an innovative spirit and strong community partnership allows Riot to achieve best-in-class execution and create successful outcomes.
Riot, a
For more information, visit www.riotplatforms.com.
Cautionary Note Regarding Forward Looking Statements
Statements contained herein that are not historical facts constitute “forward-looking statements” and “forward-looking information” (together, “forward-looking statements”) within the meaning of applicable
Information in Support of Public Broadcast Exemption under Canadian Law
The information contained in this press release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable corporate and securities laws. Shareholders of the Company are not being asked at this time to execute a proxy in favour of the Nominees or in respect of any other matter to be acted upon at the Special Meeting. In connection with the Special Meeting, Riot intends to file a dissident information circular in due course in compliance with applicable corporate and securities laws. Notwithstanding the foregoing, Riot has voluntarily provided in, or incorporated by reference into, this press release the disclosure required under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations (“NI 51-102”) and has filed a document (the “Document”) containing disclosure prescribed by applicable corporate law and disclosure required under section 9.2(6) of NI 51-102 in respect of the Nominees, in accordance with corporate and securities laws applicable to public broadcast solicitations. The Document is hereby incorporated by reference into this press release and is available under the Company’s profile on SEDAR+ at www.sedarplus.ca. The registered office of the Company is 110 Yonge Street, Suite 1601,
Neither Riot nor any director or officer of Riot is requesting that Company shareholders submit a proxy at this time. Once formal solicitation of proxies in connection with the Special Meeting has commenced, proxies may be revoked by a registered holder of Company shares: (a) by completing and signing a valid proxy bearing a later date and returning it in accordance with the instructions contained in the accompanying form of proxy; (b) by depositing an instrument in writing that is signed by the shareholder or an attorney who is authorized by a document that is signed in writing or by electronic signature; (c) by transmitting by telephonic or electronic means a revocation that is signed by electronic signature in accordance with applicable law, as the case may be: (i) at the registered office of the Company at any time up to and including the last business day preceding the day the Special Meeting or any adjournment or postponement of the Special Meeting is to be held, or (ii) with the chair of the Special Meeting on the day of the Special Meeting or any adjournment or postponement of the Special Meeting; or (d) in any other manner permitted by law. In addition, proxies may be revoked by a non-registered holder of Company shares at any time by written notice to the intermediary in accordance with the instructions given to the non-registered holder by its intermediary.
This press release and any solicitation made by Riot in advance of the Special Meeting is, or will be, as applicable, made by Riot, and not by or on behalf of the management of the Company. Proxies may be solicited by proxy circular, mail, telephone, email or other electronic means, as well as by newspaper or other media advertising and in person by managers, directors, officers and employees of Riot who will not be specifically remunerated therefor. In addition, Riot may solicit proxies by way of public broadcast, including press release, speech or publication and any other manner permitted under applicable Canadian laws, and may engage the services of one or more agents and authorize other persons to assist it in soliciting proxies on their behalf.
Riot has entered into agreements with Okapi Partners LLC (“Okapi”) and Shorecrest Group Ltd. (“Shorecrest”) in connection with solicitation and advisory services in respect of the requisitioned meeting, for which Okapi will receive a fee not to exceed
The costs incurred in the preparation and mailing of any circular or proxy solicitation by Riot will be borne directly and indirectly by Riot. However, to the extent permitted under applicable law, Riot intends to seek reimbursement from Bitfarms of all expenses it incurs in connection with the solicitation of proxies for the election of the Nominees at the Special Meeting.
None of Riot, any director or officer of Riot nor any associate or affiliate of the foregoing (i) has any material interest, direct or indirect, by way of beneficial ownership of securities of the Company or otherwise, in any matter to be acted upon at the Special Meeting, other than the election of directors, or (ii) has or has had any material interest, direct or indirect, in any transaction since the beginning of the Company’s last completed financial year or, other than the proposal submitted by Riot to Bitfarms on April 22, 2024 and referred to in Riot’s press release dated May 28, 2024 (which proposal has since been withdrawn by Riot), in any proposed transaction that has materially affected or will materially affect the Company or any of the Company’s affiliates.
No Offer to Purchase or Sell Securities
This press release is for informational purposes only and is not intended to and does not constitute an offer to sell or the solicitation of an offer, or an intention to offer, to subscribe for or buy or an invitation to purchase or subscribe for any securities, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. Such an offer to purchase securities would only be made pursuant to a registration statement, prospectus, tender offer, takeover bid circular, management information circular or other regulatory filing filed by Riot with the SEC and available at www.sec.gov or filed with applicable Canadian securities regulatory authorities on SEDAR+ and available at www.sedarplus.ca.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240903058824/en/
Investors:
Phil McPherson
303-794-2000 ext. 110
IR@Riot.Inc
Okapi Partners
Bruce Goldfarb / Chuck Garske, (877) 285-5990
info@okapipartners.com
Shorecrest Group
1-888-637-5789 (North American Toll-Free)
contact@shorecrestgroup.com
Media:
Longacre Square Partners
Joe Germani / Dan Zacchei
jgermani@longacresquare.com / dzacchei@longacresquare.com
Source: Riot Platforms, Inc.
FAQ
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