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Press release from CNW Group

Genesis Alerts Shareholders to Anticipated Dissident Shareholder Action to Seize Control of Your Board

Wednesday, July 24, 2013

Genesis Alerts Shareholders to Anticipated Dissident Shareholder Action to Seize Control of Your Board

08:00 EDT Wednesday, July 24, 2013

CALGARY, July 24, 2013 /CNW/ - Genesis Land Development Corp. (TSX: GDC) (the "Corporation" or "Genesis"), released the following letter to shareholders in connection with an anticipated dissident action against Genesis' Board:

July 24, 2013

Dear Fellow Shareholders,

Over the past several weeks, your board of directors has been responding to some extraordinary and troubling events.  We have reason to believe that a group of minority shareholders may attempt to seize control of Genesis' board, and ultimately the Company, without paying a premium to shareholders, in connection with the upcoming Annual General Meeting of Shareholders to be held on August 12, 2013 at 9 a.m. (Mountain Daylight time).

For continued and up to date information, we encourage all holders to visit www.DefendGenesis.com  where the Genesis Management WHITE proxy can be easily voted by clicking on the "Vote Here Now" button.

The Board of Genesis believes that the dissident group, led by self-styled activist investor Smoothwater Capital, plans to propose an alternate slate of handpicked director nominees - and take control of your company's Board.

Your Board has worked tirelessly to attempt to avoid a proxy contest, offering the dissident group several concessions including substantial representation on the Board.  The Board's negotiations continued with the dissidents right up until the evening of July 17, 2013 when our latest proposal was once again rejected.

Despite their rejection of our latest offer, we have included three dissident representatives, and an additional independent nominee - suggested by the dissidents, as part of management's slate.  The dissidents by contrast, seek to control the board with a majority of their nominees.  We support direct shareholder representation on the Genesis board.  However, the level of representation should be proportionate to their holdings, and the nominees should be suitable and qualified to serve on the board.

We can only speculate why the dissident group has threatened what could be a costly, distracting and unnecessary proxy contest.  We need your help to ensure that the board of Genesis remains independent, highly qualified, and representative of all shareholders - not just a vocal and sophisticated minority with their own undeclared agenda.


Genesis shareholders, it is imperative that you make your voice heard in order to protect your company from the self-serving interests of a group of minority holders and cast your vote on the WHITE proxy prior to 9 a.m. (Mountain Daylight Time) on August 8th.  If you require assistance in casting your vote, or replacement proxy materials, please call Genesis' proxy solicitation agent, CST Phoenix Advisors at 1-800-921-9376, or call collect 201-806-2222, or by email at inquiries@phoenixadvisorscst.com

Please disregard any materials you may receive from the dissidents.


Who are the Dissidents?

The Ringleaders

The dissident group of shareholders, appears to be led by Smoothwater Capital Corporation, a self-described "activist investor", which owns approximately 22% of Genesis' outstanding shares.  Smoothwater's principals include its chairman, Garfield Mitchell, and its CEO, Stephen J. Griggs.

Smoothwater is expected to support the election of Stephen J. Griggs, Mark W. Mitchell, Ed Nordholm and Loudon Owen.  With the exception of Mr. Nordholm, each one of Smoothwater's supported nominees appears on Genesis' management slate of directors.

It's worth noting that dissident nominees, Ed Nordholm and Loudon Owen, led a dissident action against Genesis in July 2012 claiming the support of Garfield Mitchell and other shareholders.

Your Board has acted reasonably, fairly and in a responsive manner to shareholder concerns, including placing three dissident nominees and their suggested independent nominee on the management director slate.  Instigating a proxy contest for the sake of adding Mr. Nordholm to the board appears petty and has the ring of a creeping takeover.  Only with your help and support can we can overcome the dissident group's minority shareholdings, and elect a qualified and representative board.

Why Fight a Proxy Contest Over One Director?

Genesis represents Smoothwater's first foray into so-called activist investing.  Launched with much fanfare in May 2013, Smoothwater included details of its investment in Genesis within the press release announcing its formation.  The Board found this type of a marketing announcement to be out of character for traditional activist shareholders who usually first attempt private engagement - before engaging in bullhorn advocacy.

The board of Genesis fears that our company is being used as a kind of coming out party for Smoothwater - hoping for a quick win to build a track record, and perhaps attract new investors.  Shareholders should not allow our company to be used by practitioners of the latest investment fad to put a trophy on their wall.

Independence

Dissident nominee Mark W. Mitchell, is a current director of Genesis and the brother of Smoothwater Chairman Garfield Mitchell.  Mark Mitchell owns approximately 9.5% of our outstanding shares, and serves with Garfield Mitchell as a trustee of the W. Garfield Weston Foundation.  It was Mark W. Mitchell and not Smoothwater that first approached the Genesis Board with a proposal to reconstitute the board with the dissident nominees.

The Board's review of the Mitchells' actions and conduct to-date have led the Board to determine that further investigations into such conduct and a review of whether they are acting jointly and/or in concert with one another are merited.

In addition, Mr. Owen and Mr. Nordholm appear to be co-investors in at least one business venture1 , and serve together on the board of TSX-listed Hangfeng Evergreen Inc.

On the surface, the consequences of a directors' potential lack of independence from another may seem trivial.  However, in an instance where one party has made or is participating in a takeover bid for Genesis, or is making a decision about compensation, or is serving in a fiduciary role like a member of the audit committee, shareholders would expect that directors considering such an offer would be free of even the perception of a conflict.

Further increasing the representation of the dissident group on the board of directors will reduce the actual and perceived independence of our Board.

___________________________
1 The Fight Network http://www.crtc.gc.ca/ownership/eng/cht217.pdf

What Can Shareholders Do?

The dissident group appears to be after nothing less than control of your Board.  Their respective shareholdings, and the potential conflicts that exist between them, causes us great concern.  We are not opposed to the presence of minority shareholder representatives on the Board.  The Board of Genesis has made significant concessions to appease the dissident group in offering them substantial, but not majority control of the Board and your company.

Owning shares, even a lot of shares, is only one consideration when a board of directors is constructed.  Board members are expected to possess complementary skill sets, experiences and backgrounds.  Directors, particularly independent directors, should demonstrate independence of thought and action from one another, and be free of the appearance of conflict.  The substantially reconstituted board you elected just ten months ago, includes experienced and highly qualified individuals, who enhance and complement one another's skills.

The time to act is now, all shareholders need to make their voices heard and insist that the board of Genesis remains independent, highly qualified, and representative of all shareholders - not just a vocal and sophisticated minority.

Please cast your vote on the WHITE proxy today in support of the management nominees and disregard any materials you may receive from the dissidents.  In order to be counted, your vote must be submitted prior to 9 a.m. (Mountain Daylight time) on August 8, 2013.

For continued and up to date information, we encourage all holders to visit www.DefendGenesis.com  where the Genesis Management WHITE proxy can be easily voted by clicking on the "Vote Here Now" button.

If you require assistance in casting your vote, or require replacement proxy materials, please call Genesis' proxy solicitation agent, CST Phoenix Advisors at 1-800-921-9376, or call collect 201-806-2222, or by email at inquiries@phoenixadvisorscst.com

Sincerely,

Michael Brodsky           William Pringle
Chairman of the           Director &
Board             Chair of the Special Committee
           

About Genesis

Genesis is a Calgary-based real estate development corporation engaged in the acquisition, development, and sale of land, residential lots and homes in Alberta and British Columbia. All business activities of the Corporation are conducted in Western Canada, with development lands held primarily in and around the cities of Calgary and Airdrie. With a diversified and substantial land base, the Corporation is well positioned to focus on developing those projects that offer the best return in the market going forward.

SOURCE Genesis Land Development Corp.

For further information:

Shareholders

CST Phoenix Advisors
1-800-921-9376 or call collect 201-806-2222
inquiries@phoenixadvisorscst.com

Media

Bayfield Strategy, Inc.
Riyaz Lalani
416-907-9365
rlalani@bayfieldstrategy.com

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