ACT NOW - VOTE AGAINST THE DESTRUCTION OF SHAREHOLDER VALUE
I am the principal of Marcel Equity Pty Limited and RJL Investments Pty Limited, an 8% shareholder in Hyro Limited (Hyro). Together with shareholders representing another 25% of the shares in Hyro, I have some very serious concerns about the KIT Digital takeover, which I believe greatly undervalues our company. So I’m seeking your help to stop the proposed sale to KIT Digital that was announced by the Company on 23 April 2012 by acting now to vote AGAINST it.
These are the main reasons why:
1. It’s a sell-out • You should be aware that this is NOT a takeover of YOUR Hyro shares but a SALE OF THE KEY ASSETS OF HYRO for SHARES in KIT Digital. • While KIT Digital was given the right to pay cash it has already stated that it intends to pay in KIT Digital shares. • You are actually swapping your investment in Hyro's current business for a minority interest in a company with operational headquarters split between the Czech Republic and the USA. • KIT Digital is a company in financial turmoil. • The Hyro Board has now acknowledged that the value the Company may get is now only 35c a share – nearly half of what was initially announced. • Based on current values shareholders may only receive a capital return of about 20 cents a share in 6 months’ time when the first tranche of KIT shares are able to be sold (based on the recent market for KIT shares at that time). This is nearly half of what the Hyro shares have been trading at over the last three months.
It’s a VERY BAD deal for you and for our Company
2. THE OFFER IS NEITHER FAIR NOR REASONABLE • Based on current share values, if the 80% of KIT shares that are allowed to be sold after 6 months are sold, the shareholders may receive a capital return of no more than about 20c a Hyro share. This is about HALF of the current value of Hyro shares. • The balance of the KIT Digital shares will be escrowed and cannot be sold for 12 months! Who knows what may happen to their value during this time.
3. KIT DIGITAL IS A COMPANY IN FINANCIAL TURMOIL • The KIT Digital share price has dropped by over 70% in the past three months and over 50% since the deal was announced! • KIT Digital is NOT a STRONG nor STABLE company. The CEO/Chairman and Founder has recently resigned. Four members of the Board have recently resigned. • KIT Digital has announced a MAJOR negative revision in its forecasts and is currently losing cash! • There is an SEC investigation afoot along with a potential shareholder class action. • KIT’s Auditors have commented adversely in their recent Accounts on the company’s internal financial controls.
WHY would you swap a very good revenue generating business for shares in KIT Digital?
4. THE DIRECTORS ARE PAYING INSIDERS OVER 20% OF THE DEAL (as it relates to shareholders) • The Board has proposed paying Hyro directors, Bill Votsaris, nearly $1m in shares in Hyro and $280,000 in Hyro shares to Anthony Poiner, contingent on the approval of the KIT deal. • We don’t believe that proper disclosure has been made to the shareholders regarding these large incentive payments. • There is currently NO supportable justification based on the disclosures why these payments should be made. • The award of approximately 10% of Hyro’s entire issued shares to Votsaris and Poiner will also greatly reduce our share of any future value/payment for our shares. WHAT IS THE ALTERNATIVE? • Marcel Equity has proposed investing in the Company at 40c a Share • Marcel Equity has proposed to bring new businesses and value into Hyro • Marcel Equity has proposed to reduce the waste and the high costs being incurred - the Hyro Board and the MD are taking out over $1million in remuneration each year!
Details of the Marcel Equity plan can be found on the website www.anewhyro.com which we encourage you to visit.
To prevent the destruction of shareholder value we are asking fellow shareholders to take action by voting AGAINST the sale to KIT Digital and the unjustified and substantial financial rewards to Votsaris and Poiner. Vote AGAINST resolutions 4, 5, 6, 7 and 8.
I am asking shareholders who support saving our company from a disastrous deal to appoint me, Gary Cohen, as their proxy. All you need to do to vote AGAINST resolutions 4, 5, 6, 7 and 8 is:
• Complete and return your personalised proxy form that was mailed to you by Hyro OR • Vote online at www.boardroomlimited.com.au/vote/hyroagm2012. You will need to enter your personalised reference numbers that can be found on your proxy form OR • Fax your proxy form to +61 2 9290 9655
For your vote to count it must be received no later than 10am Sydney time on Tuesday, 5 June 2012. For more information please visit our website at www.anewhyro.com If you have any questions or need any help completing your proxy form, please contact the information line on 1300 788 737.
Sincerely
Gary Cohen Chief Executive Officer Marcel Equity Pty Limited
HYO Price at posting:
31.0¢ Sentiment: Sell Disclosure: Held
