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Press release from Business Wire

Octavian Responds to Inaccurate Claims by EnerCare

<p class='bwalignc'> <b>Urges Shareholders to Vote Their <span class='bwuline'>YELLOW</span> Form of Proxy Today</b> </p>

Friday, April 13, 2012

Octavian Responds to Inaccurate Claims by EnerCare07:00 EDT Friday, April 13, 2012 NEW YORK (Business Wire) -- Octavian Advisors, LP, the largest shareholder of EnerCare Inc. (TSX: ECI), which owns approximately 13% of EnerCare's outstanding common shares and has been a shareholder for more than two years, today responded to inaccurate claims by EnerCare's Board of Directors in its April 5, 2012 press release. “EnerCare's Board has made a series of inaccurate claims and allegations against Octavian that are clearly designed to distract shareholders from the troubling fact that the current Board has repeatedly destroyed value and failed to act in the best interests of the company and its shareholders,” said Richard Hurowitz, Chairman and Chief Executive Officer of Octavian. “Our fellow shareholders should not be misled by the Board's blatant attempts to prevent minority representation that would act in shareholders' best interests – the current Board is merely trying to further entrench itself and preserve the status quo at all costs. EnerCare shareholders deserve better and we look forward to their support in effecting positive change at the company at the upcoming April 30 shareholder vote.” Octavian responded to the following attempts by EnerCare's Board to distort the record and further its own self-interests at the expense of the company's shareholders:               ENERCARE CLAIMS       THE TRUTH“Octavian has intentionally tried to disrupt EnerCare's strategy of protecting monthly dividends and providing steady growth.”       In fact, it was Octavian that urged EnerCare to increase the dividend a year ago, long before the current Board authorized the recent increases. The same Board that previously cut the dividend is now trying to take credit for the recent increase that Octavian had previously recommended.   “Assuming the reinvestment of dividends over the period from the IPO in 2002 to December 9, 2011, EnerCare returned an increase in value to shareholders of 118%, significantly better than the 78% increase for the S&P/TSX Composite Index.”       Do not let EnerCare distract you from its lackluster performance with self-serving calculations that conspicuously exclude dividends from the benchmark index while simultaneously including them for EnerCare.   The ugly truth is that if EnerCare presented an accurate and consistent comparison of the timeframe in question, it would demonstrate that EnerCare shares returned 117% while the S&P/TSX Composite Index returned 125%. However, this is based on the highly improbable assumption that a shareholder of EnerCare reinvested every single dividend payment back into EnerCare stock for almost nine years. More likely, shareholders who simply collected the dividend in cash have experienced a total return of 72%, compared with the index return of 118%.   If you examine the timeframe from EnerCare's IPO in 2002 until April 27, 2011, the last trading day before Octavian announced it may seek changes to EnerCare's Board composition, EnerCare shares returned only 57% versus a 145% return for the TSX. This calculation includes dividends but does not assume they're reinvested; underperformance is even greater if one assumes dividends are reinvested.   Since Octavian made its announcement on April 28, 2011, EnerCare shares have returned 46%. Over the same period, the Canadian market has decreased by 12% (also including dividends but not assuming they are reinvested).*   “Octavian's objective is a quick sale of the company, at any price.”       In fact, we have been a significant shareholder in the company for over two years and continue to purchase EnerCare shares because we believe the company has tremendous potential that the current Board is failing to unlock.   Octavian supports an objective evaluation of all available options to increase shareholder value, and is not necessarily pushing for a sale of the company. In fact, Octavian rejected a proposal by EnerCare's Chairman – Mr. James Pantelidis – on May 16, 2011 that we sell our shares at approximately $7.20 per share.   If elected, Octavian's nominees would explore all value creation opportunities, which in addition to the sale of the company also include a moderate increase in leverage and special dividend, a spin-off of the submetering business, and a share buyback.   “…Octavian's effort to obtain a grosslydisproportionate 40% board representation for its 13% shareholding isinconsistent with fair representation for all shareholders…”       Octavian is seeking minority representation on the Board – not control – for the benefit of all shareholders.   In fact, Octavian is seeking only one Board seat for itself – the three other candidates are completely independent, highly qualified professionals who have had no prior relationship with Octavian and were identified by an executive search firm for their experience and ability to create value for EnerCare and its shareholders.   Octavian has received an enthusiastic response from its fellow EnerCare shareholders and their feedback confirms that the time has come for change at the company.   “Octavian has mischaracterized EnerCare's efforts at renewal of its board of directors.”       The Board's outrageous recent conduct – its refusal to appoint an independent chair for the special meeting and its last-minute expansion of the Board with two hand-picked directors just before the shareholder vote – has made it abundantly clear that the current directors will stop at nothing to further entrench themselves and disenfranchise shareholders. This inappropriate and unacceptable stance forced Octavian to call for the removal of James Pantelidis (Chairman of the Board) and Mr. Jerry Patava (Chairman of the Governance Committee) from EnerCare's Board.   Shareholders should be alarmed and upset by the Board's desperate and costly campaign to deny shareholders representation and should question why the Board is wasting the company's resources on an effort to prevent a minority of shareholder-friendly voices in the Boardroom.   “Octavian demands the removal of twoexperienced, independent EnerCare directors, including Jim Pantelidis, theChair of the Board, due to losses incurred during the most drastic economicdownturn in the North American economy since the Great Depression, from 2008to 2009.”       During the financial crisis, EnerCare shares cratered 71% while the S&P/TSX Composite Index was down only 16% during the same period. EnerCare underperformed because its earnings imploded due to non-economic issues and the fact that the current Board cut the dividend. Following the dividend cut, EnerCare shares continued to decline another 15% while the TSX increased.   In fact, EnerCare issued a press release on September 21, 2009 explaining why the Board was cutting the dividend. The reasons they gave were “higher interest costs,” “increased cash operating losses in the Fund's Sub-metering business,” and “increased capital expenditures on exchanges of water heaters.” Broader economic factors were never cited as a reason for this highly defensive company's underperformance and it is clear the Board is attempting to re-write history in an effort to recast its poor decision-making – decisions that destroyed shareholder value.   “Octavian compares EnerCare to the sale of UE Waterheater Income Fund. However, Octavian neglects to point out that UE Waterheater Income Fund had an entirely different business model than EnerCare. This just demonstrates that Octavian lacks any understanding of EnerCare's business…”       In fact, UE Waterheater was broadly considered a good comparable to EnerCare. Following the UE Waterheater transaction, a Scotia Capital analyst wrote:   “The surprisingly high premium (50% to 30-day trailing VWAP) that Alinda Capital Partners is prepared to pay to acquire all of the assets of UWH confirms the tremendous liquidity in the marketplace. It suggests that [EnerCare] should also be an attractive takeout candidate given the similarities in their core portfolio appliance rental businesses.”   The simple fact of that matter is that EnerCare's Board failed to act when it had an unequivocally attractive opportunity to create shareholder value. It also continues to defend its actions in hindsight. How can the current Board be trusted not to miss another attractive value creation opportunity in the future?   “…Octavian fails to note that EnerCare's foresight in developing a sub- metering expertise and business in 2009 positioned it to take advantage of opportunities created with the regulatory certainty that soon followed…”       It is clear that the Board acted recklessly by failing to take into account regulatory risks associated with the Stratacon acquisition. Despite the recent improvement in this cash burning business because of its restart by regulators, the company was forced to write down its investment and it was a key reason that the dividend was cut back in 2009.         Octavian urges its fellow shareholders to vote their YELLOW form of proxy to elect Octavian's highly qualified nominees – Beth Horowitz, Graham Senst, T. Richard Turner, and Richard Hurowitz – to EnerCare's Board of Directors at the annual and special meeting of shareholders scheduled to be held on April 30, 2012. Octavian's nominees – three of whom are completely independent and one of whom represents the company's largest shareholder – will represent a minority of the Board and will work for EnerCare shareholders to maximize the value of their investment. For more information on how to vote your YELLOW form of proxy, as well as access to other important materials, please visit If you have any questions and/or need assistance in voting your shares, please call MacKenzie Partners, Inc. at 1-800-322-2885 (toll-free) or 212-929-5500 or e-mail and they will assist you. Collect calls will be accepted. * Based on EnerCare's closing share price on April 10, 2012.About Octavian Advisors, LP Octavian Advisors, LP is a global investment firm with offices in New York and London. The firm focuses on special situations and distressed investments in international markets, and has successfully invested in over 40 countries on six continents. Octavian currently manages approximately $1 billion for leading endowments, foundations, pension funds, family offices and institutions. Cautionary Statement Regarding Forward-Looking Information Certain information in this press release may constitute “forward-looking information”, as such term is defined in applicable Canadian securities legislation, about the objectives of Octavian as they relate to EnerCare, the potential impact of certain initiatives on the value of EnerCare shares, the impact of the Octavian Nominees, if elected, on the financial condition, results of operations, business strategies, revenue enhancements, competitive position of EnerCare, the risks related to shareholders' investment in EnerCare if the current board continues to control the direction of EnerCare, and other matters. All statements other than statements of historical fact may be forward-looking information. Forward-looking information is often, but not always, identified by words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “would”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. Material factors or assumptions that were applied in providing forward-looking information, include, but are not limited to, EnerCare's future growth potential, its results of operations, future cash flows, the future performance and business prospects and opportunities of EnerCare, the election of the Octavian Nominees, the ability of the Octavian Nominees, if elected, to effect positive change at EnerCare, that the six of the current directors recommended by Octavian for election to EnerCare's Board at the annual and special meeting of shareholders scheduled to be held on April 30, 2012 (the “Management Nominees”) will consent to serve on EnerCare's Board with the Octavian Nominees and the current general regulatory environment and economic conditions remaining unchanged. Forward-looking information contained in this press release reflect current expectations of Octavian regarding future events and operating performance of EnerCare, and speak only as of the date of this press release. Such forward-looking information is based on currently available competitive, financial and economic data and operating plans and are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of EnerCare, or general industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Recent events in global financial and credit markets have resulted in abnormally high market volatility and a level of uncertainty not seen in decades. Such uncertainty may continue to impact the global, North American and Canadian economies in unpredictable ways and may impact the results of EnerCare in a manner which is currently impossible to ascertain. Many other factors could also cause EnerCare's actual results, performance or achievements to vary from those expressed or inferred herein, including without limitation, the possibility that the anticipated benefits from the election of the Octavian Nominees cannot be fully realized or may take longer to realize than expected; that the six Management Nominees will not consent to serve on EnerCare's Board with the Octavian Nominees; the ability of EnerCare to retain and hire key personnel and maintain relationships with customers, suppliers or other business partners following the election of the Octavian Nominees; the impact of legislative, regulatory, competitive and technological changes; the state of the economy; credit and equity markets; availability of credit and other financing; and the financial markets in general. Many of these risks and uncertainties could affect EnerCare's actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking information provided by Octavian. The impact of any one factor on a particular piece of forward-looking information is not determinable with certainty as such factors are interdependent upon other factors, and Octavian's course of action would depend upon its assessment of the future considering all information then available. Should any factor affect EnerCare in an unexpected manner, or should assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. All of the forward-looking information reflected in this press release is qualified by these cautionary statements. There can be no assurance that the results or developments anticipated by Octavian will be realized or, even if substantially realized, that they will have the expected consequences for EnerCare. Forward-looking information is provided and forward-looking statements are made as of the date of this press release and except as may be required by applicable law, Octavian disclaims any intention and assumes no obligation to publicly update or revise such forward-looking information or forward-looking statements whether as a result of new information, future events or otherwise. Investors:Mackenzie Partners, Inc.Larry Dennedy, 212-929-5239ldennedy@mackenziepartners.comorCharlie Koons, 212-929-5708ckoons@mackenziepartners.comorMedia:Sard Verbinnen & CoJonathan Doorley,