News Column

Ceres Governance Issues Prompt Call for Special Meeting

Mar 6 2013 12:00AM

Marketwire

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TORONTO, ONTARIO -- (Marketwire) -- 03/06/13 -- Ceres Global Ag Corp. minority shareholder VN Capital Management, based in New York, publicly announced today that they have called for a Special Shareholder's Meeting to discuss the termination of the company management contract with Front Street Investment Management Inc.

"We have been saying for some time that Ceres' investment company structure has negatively impacted share price and when you combine this with corporate governance deficiencies, the stock has languished. The share price has declined from $12.00 at inception in 2007, to $6.90 currently, and has stayed consistently below Net Asset Value. We have tried without success to work with management and the independent board members to address these issues. Regrettably, we see no alternative but to push for a Special Meeting," said James Vanasek, a principal with VN Capital. VN Capital holds 1,030,800 common shares or 7.2% of Ceres.

VN's concerns stem from the fact that Front Street Management employees act as the management team for Ceres under a contract which generates roughly $3 million per year. These high management fees may be common to hedge funds, but are completely excessive and inappropriate for what is now an operating company of this size. The net effect of this drain on the company has been to reduce earnings leading directly to a markdown on the share price.

Further, it is VN's position that this management arrangement, rightly or wrongly, causes potential investors to avoid the stock because such arrangements are perceived to unfairly benefit insider management. Under the terms of the contract with Front Street, an incentive fee provision of 20% of any gain above the Net Asset Value high, thereby caps the stock's upside potential, making it even more unattractive to outside investors.

VN contends the recent hiring of Michael Detlefsen, Front Street's financial advisor, as Riverland Executive Chairman further underscores the need for Ceres to reform its corporate governance.

VN is calling for:

1. The termination of Ceres Management Agreement with Front Street. The management agreement allows shareholders to trigger the termination of the management agreement via extraordinary resolution. 2. Ceres to adopt a dedicated internal management team to run the company independent of Front Street. This will ensure a ensure a clean, transparent and accountable financial record.



"We believe shareholders need to be aware of the implications of these matters on shareholder value. We are calling for an open and transparent discussion with all shareholders so that their views can be heard and addressed," Vanasek said.

Under Section 105 of the Business Corporations Act of Ontario, Ceres has 21 days to set a date to call the Special Meeting upon receiving such a requisition from a 5% shareholder. This notification took place on February 26, giving Ceres a deadline of March 19 to call such a meeting.

About VN Capital Management

VN Capital Management, LLC is a non-registered investment advisory firm located in New York, New York that was founded in 2002 by P. Donnell Noone and James T. Vanasek. The firm manages the VN Capital Fund I, LP, a Delaware based hedge fund that holds a concentrated portfolio of small-cap equities.

About Ceres Global Ag Corp.

Ceres Global Ag Corp. owns 100% of Riverland Ag Corp., owns a 25% interest in Stewart Southern Railway Inc. Riverland Ag Corp. is an agricultural grain storage and handling and supply chain business operating 14 grain storage facilities in Minnesota, North Dakota, Wyoming, New York, Wisconsin and Ontario having aggregate storage capacity of approximately 54 million bushels. Stewart Southern Railway Inc. is a short line rail company that operates in Southeastern Saskatchewan as our commodities logistics division. Ceres common shares trade on the Toronto Stock Exchange under the symbol "CRP".



Contacts:
Jesson + Company Communications Inc.
Barbara Jesson
416 323 7828
bjesson@jessonco.com

Jesson + Company Communications Inc.
Nicola Blazier
416 323 7828
nblazier@jessonco.com





Source: Marketwire


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