Riot Platforms Urges Bitfarms Shareholders to Elect New Directors at Upcoming Meeting
Joerg Hiller Sep 04, 2024 07:28
Riot Platforms calls for Bitfarms shareholders to vote for new board members to improve governance ahead of a crucial special meeting.
Riot Platforms, Inc. (NASDAQ: RIOT) has issued an open letter to shareholders of Bitfarms Ltd. (NASDAQ/TSX: BITF) ahead of the upcoming special meeting scheduled for October 29. Riot, which owns approximately 19.9% of Bitfarms, is advocating for significant changes to the Bitfarms Board of Directors to enhance shareholder value, according to riotplatforms.com.
Call for Governance Overhaul
In its letter, Riot emphasized the need for further board changes, citing the resignation of two Bitfarms co-founders, Emiliano Grodzki and Nicolas Bonta, as insufficient. The letter criticized the Bitfarms Board's recent actions, including the adoption of a shareholder rights plan and the acquisition of Stronghold Digital Mining, Inc. (NASDAQ: SDIG), as reactive and inadequate.
Riot pointed out that the Stronghold acquisition, valued at $175 million, including $50 million in assumed debt, represents a more than 100% premium over Stronghold's closing share price prior to the announcement. Riot questioned the timing and rationale behind this transaction, suggesting it was another move to entrench the current board.
Proposed Nominees for the Board
Riot has announced its intention to nominate two independent directors, Amy Freedman and John Delaney, for election at the special meeting. These nominees, according to Riot, possess the necessary experience to bring much-needed governance oversight and transaction expertise to the Bitfarms Board.
Riot's campaign has already led to some changes, including the resignation of co-founders Grodzki and Bonta. However, Riot believes that further independent voices are needed to ensure that the board's decisions benefit all shareholders, rather than just a select few.
Criticism of Bitfarms' Board Actions
Riot's letter detailed several concerns about the current Bitfarms Board's actions, including:
- Failed Poison Pill: The adoption of a shareholder rights plan with a 15% threshold, which was invalidated by the Ontario Capital Markets Tribunal.
- Unilateral Board Appointments: The appointment of Fanny Philip to the board without consulting Riot.
- Stronghold Acquisition: The acquisition's timing and terms, which Riot argues, do not serve shareholders' best interests.
- Lack of Engagement: The board's continued reluctance to engage with Riot constructively.
Path Forward
Riot is urging Bitfarms shareholders to vote for its nominees to help rectify what it describes as broken governance at Bitfarms. Riot also warned against any pre-meeting actions by the current Bitfarms Board that could disadvantage shareholders or dilute their equity.
The special meeting, set for October 29, will be a pivotal moment for Bitfarms' future governance. Riot remains committed to its campaign and looks forward to presenting its case to shareholders.
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