13 Mar 2017 11:36
13 March 2017
YOSSI WILLI MANAGEMENT AND INVESTMENTS LTD
Re: General Meeting of Shareholders of B.S.D Crown Ltd. (the "Company")
Dear Fellow Shareholder,
I am writing to you to ask for your support at the forthcoming General Meeting of the Company to be held on 29 March 2017, which has been requisitioned by myself.
As I wrote in my letter dated 28 February 2017, while we are confident in the Company's prospects and potential for growth, we are gravely concerned by recent developments and by the execution of the strategic direction of the Company and other value detracting actions undertaken by the Company's board of directors (the "Board"), and we have therefore requisitioned an extraordinary general meeting of the Company's shareholders where we are proposing, inter alia, to remove from office all of the existing directors of the Company (apart from the Company's external director) and the appointment of several individuals instead of such existing directors (the "Resolutions").
I would like to reiterate my points below:
1. Composition of the Current Board
The shareholders of the Company have not elected any of the currently serving directors (excluding the Chairman). Instead, all of such directors (excluding the Chairman) were appointed by the Board.
· On 5 July, 2016 the Company announced the results of the General Meeting in which the following directors were elected: Mrs. Neomi Enoch, Mr. Gil Leidner and Mrs. Iris Even-Tov.
· Following announcements released by the Company on 12 August, 2016 and on 5 September, 2016, all the aforementioned directors resigned from their position as directors (excluding Iris Even Tov, who was appointed as an external director instead of as a non-external director).
· On 28 November, 2016 the Company announced that Mr. Zvi Shur resigned from his position as an external director.
· All of the currently serving directors (excluding the Chairman) were not appointed by the shareholders but rather were self-appointed by the board, and have never received an affirmative vote for their appointments by the shareholders.
In addition, not only are the current directors lacking the support and affirmative vote of the shareholders, the previously duly elected directors have all resigned from the Board. The resignation of the appointed Board members is a clear indication and a red flag as to the lack of direction of the Company and the poor confidence that these members had in the Company. Furthermore, the lack of leadership at the helm of the Company during such times of turbulence, coupled with the matters described herein, should be of great concern to all shareholders.
2. Misappropriations of Company Funds
The shareholders of the Company have the right to be informed as to what has happened to the misappropriated funds of approximately USD 45 million and elect Board members that will actively pursue this misappropriation and seek to reclaim these lost funds.
· On 17 May, 2016 the Company announced, in relation to cash deposits of approximately US$30 million held by the Company with Meinl Bank in Austria ("Meinl"), that certain documents purporting to relate to such deposits were received from Meinl, indicating that since 2013, these deposits have been allegedly used as collateral for loans taken by off-shore companies unknown to the Company.
· On 3 August, 2016 the Company announced that it has filed a claim against Israel 18 B.V., the controlling shareholder of the Company ("Israel 18"), a company controlled by Mr. Gregory Gurtovoy, the Chairman of the Company's board, for the return of US$13.6 million deposited with the International Bank of Azerbaijan ("IBAR") by the Company, which IBAR now claims has been used as security for a loan taken by Israel 18.
· On 5 September, 2016 the Company announced that cash deposits of approximately US$ 2.2M were transferred to Alko R Capta LLP as an advance payment in relation to the proposed purchase by the Company of certain car dealerships in the US. However, the transaction was never consummated, and although the Company demanded the return of these deposits, they were not returned.
The misappropriations of funds and the ongoing repatriation of Company assets amount to approximately US$ 45M and should be of grave concern to all shareholders. My nominees for election to the Board will actively pursue the retrieval of these funds, and ensure that no such misappropriations will happen in the future.
3. Dividends from Company Subsidiaries
The shareholders are entitled to be informed as to what has happened to the dividends that the Company has received from its subsidiaries during the last 18 months.
· The Company's subsidiaries G. Willi-Food International Ltd and Willi-Food Investments Ltd. have distributed to their shareholders over the last 18 months dividends in the aggregate amount of approximately NIS 30 million.
The Company does not provide financial statements and consequently this lack of transparency as to the dividends (which is the primary income of the Company) is of grave concern. This serves the agenda of the current management and enables the Company's management to continue to misappropriate funds from the Company. It is of primary interest to replace the current Board with members who will be keen to allocate the missing funds, hold accountable the individuals who misappropriated the funds and institute proper procedures and compliancy guidelines so that such actions do not happen in the future.
4. Mr. Gregory Gurtovoy
The shareholders of the Company have the right to hold Mr. Gurtovoy accountable for the current situation of the Company, the ongoing extended deterioration of the Company and the devaluation in value of their holding in the Company.
· On 19 February, 2016, the Israel Securities Authority initiated criminal investigations against the Company and its Chairman of the Board, Mr. Gregory Gurtovoy, as a result of allegations of breaches of Israeli securities laws and offenses. Thereafter, the Company announced that a number of officers and directors were questioned by the ISA, and that Mr. Gurtovoy was detained.
· Mr. Gurtovoy is also the controlling shareholder of Israel 18, against which the Company filed various claims, which puts Mr. Gurtovoy in a clear conflict of interests.
· Mr. Gurtovoy, who is the chairmen of the Board is directly responsible for the Company's devaluation in share value.
It is clearly in the best interest of the shareholders and the Company to remove the Chairman from office and to elect Board members who are not in conflict with the misappropriations of funds, are not responsible for the poor results of the Company and have not created this great devaluation in value. The incumbent directors (except for the external director), all of whom are affiliated, directly or indirectly, with Mr. Gurtovoy should be replaced by directors who are not affiliated with him, and therefore I encourage you to support the election of my nominees to the Board.
5. Company's Shares Suspended From Trading
The Company must take all action to cancel the suspension from trading of its securities, as set forth below:
· On 29 April, 2016, the Company announced that it will not publish its annual financial statements for the year ended 31 December, 2015 by 30 April, 2016 (as required by the Listing Rules and the Disclosure and Transparency Rules of the UKLA and the London Stock Exchange) and that, given the delay in publishing such financial statements, the Company requested that trading in its shares be temporarily suspended as of such date.
· The Company has not released any financial statements of the Company for 2016, and has not indicated that it has any intention of releasing them in the near future.
· Pursuant to UK regulations, since the Company has not provided its financial statements within six months from the suspension, the Financial Conduct Authority may delist the Company's shares from the London Stock Exchange.
Although this breach has been outstanding for an extended period, the Company has not remedied it, and therefore the Company shares may be delisted from the London Stock Exchange as a direct result of the failure of the Company and its board to release the Company's financial statements.
6. New Board Will Push Our Company Forward
The shareholders deserve to have an independent board that can change the Company's situation and get it back on track. My nominees for election to the Board possess the necessary skills, experience and market understanding needed to achieve this (For a full list of biographies please refer to Exhibit A of my letter dated 28 February 2017).
Upon election, the new Board will take the following actions (among others):
· Fully investigate the misappropriation of funds and seek to repatriate such funds to our Company.
· Release the Company's financial statements in order to cancel the suspension of trading of the Company's securities.
YOUR VOTE IS IMPORTANT
For the reasons stated above, we have requested to submit to the approval of the Company's shareholders (i) the removal of all the incumbent non-external directors and (ii) the nomination of the following persons to the Company's Board of Directors instead of the incumbent non-external directors: Shmuel Messenberg, Keren Marcus, Avi Zigelman, Joseph Williger and Shlomo Wertheim (the latter, to serve as an external director), and to approve that their remuneration and benefits shall be as determined for external directors in accordance with the Companies Regulations (Rules regarding Compensation and Expenses of an External Director), 5760-2000.
Please vote "Against" the following directors:
· Resolution 7: Mr Gregory Gurtovoy
· Resolution 8: Mr Eli Arad
· Resolution 9: Mr Nir Netzer
· Resolution 10: Mr Arik Safran
Please vote "For" the following proposed directors:
· Resolution 4: Shlomo Wertheim
· Resolution 11: Mr Shmuel Messenberg
· Resolution 12: Mrs Keren Marcus
· Resolution 13: Mr Avi Zigelman
· Resolution 14: Mr Joseph Williger
We believe that the knowledge, experience and market understanding of the nominees listed in Resolutions 4, 11, 12, 13 and 14 above will significantly change the direction of the Company and improve the execution of its strategy, and therefore we urge all shareholders to participate in the upcoming General Meeting and vote in favour of the above resolutions.
Sincerely,
Joseph Williger
Yossi Willi Management & Investments Ltd
For further information please contact:
YOSSI WILLI MANAGEMENT & INVESTMENTS LTD
Yossi Williger yossi@ydekel.co.il
GEORGESON
Domenic Brancati 020 7019 7003
Anthony Kluk 020 7019 7032