Why management doesn't deserve shareholder support
I've been reading some of the votes of confidence for Thermo Tech's management on Yahoo! and notice the marked shift in tactics. Some are even seemingly rational and others... let's just say that they are fairly transparent.
They talk of the hard work Rene has done, and parrot the question "could anyone have done better?" meanwhile blatently ignoring the mountainous paper trail of blatent mismanagement and lies. Who knows of their motives or their logic, but they blame shareholder discontent on bitterness and not willing to wait for the "long term" -- all the while ignoring the probablity that there will not be a long term if there is no change. I don't think that shareholders are demanding accountibility out of bitterness nor desperation -- let's keep it simple, could it be that they are accountibility because there is no accountibility?
Some like Teederr (on Yahoo!) plead for rational thinking, while promoting Thermo Tech and hiding behind flawed reasoning. Unfortunately, they ignore the facts. I'm not sure whether they are doing it because they are paid to or because they do not have an understanding of the facts, but there the facts lay contradicting them begging to be noticed.
Here are just some of the reasons why Thermo Tech's management does not deserve your support:
1. Rene was not the inventor yet he had the patents assigned to him as such.
The fact of the matter is that Rene was just as much an inventor of the process as I or any other person on this thread is. The process was invented at UBC. Thermo Tech bought the patents for the thermophyllic process which has remained the same since it was purchased (don't believe me? do your due diligence). Rene is a promoter and never was a scientist.
2. An overt focus on promoting stock. (What do car races have to do with waste management?)
For those of you who believe in Thermo Tech's management, kindly please tell me why half a million dollars was spent to pay Continental Capital when the company raises all their money through private placements? And why was it necessary to pay to promote Thermo Tech at a race track? How many people at Investor Relations does Thermo Tech needs. Trooper, a comparable company with a possibly higher market cap than Thermo Tech has a total of ONE person at Investor Relations. Thermo Tech on the other hand has a whole team of people. Including those boiler room operations cold calling people to buy Thermo Tech.
Of considerable concern to shareholders should be the fact that probably considerably more money has been spent on promoting the stock than the technology.
Teederr states: "I decided to do considerable due diligence and analysis and I have come to the conclusion that to get rid of Rene at this time would rather then help the company would be a disaster for it and the shareholders" and then goes on to say "I can't accept for a moment that Rene or Hanson have not been busting their buns to keep the ship afloat and to not incur any unecssary expense." I wonder if he/she has even bothered to look over the financial statements. Why have Sales, General and Administrative costs have risen so much over the years? Let's see, could it possibly be all those useles expenditures? How much did the race car sponsorship cost?
Of all the considerable sums of money raised, how much was actually into Research and Development? None of the research and development done in the past few years was even of commercial value (see notes to the financial statements).
3. Trooper Technologies and other lawsuits.
This company has had a very long history of lawsuits and settlements. In fact, to my knowledge, Thermo Tech has never emerged the victor in any court battle despite the many lawsuits that they have fought (at least 10 court battles). Rene blames it on the advice that he got, yet why does he not sue his lawyers? He has sued just about everyone else from Dale Fehr to Trooper to IBR to his contractors.
While the lawyers have continually changed, one thing hasn't: Rene and the fact that Thermo Tech keeps losing all their lawsuits. I'm no genius by any stretch of the imagination, but me thinks that there may be a strong correlation. PrincipleOne who claims that he just another shareholder even threatened to sue me for defaming Rene. "I sue you, you sue me, we're one happy family..."
4. Management Paranoia.
While Organic Wasteland is content to sit back behind his alias claiming that it is not Rene who is paranoid, one question: why does Thermo Tech require as policy for anyone calling Investor Relations to leave their phone number and tell them the number of shares that they own?
Why does Thermo Tech go out of its way to avoid having independent board of directors sit on their board? Why does Thermo Tech hide some releases on their website?
5. Mismanagement.
Significant decline in Revenues. Despite having purchased for more than 11 M a half interest of what is currently OTT, and despite the fact that production was significantly scaled up, Revenues have dropped. At any other Tech company, heads would have rolled. The question isn't whether or not anyone could have done better, but how much better.
Management is not content to admit that they have made mistakes, but they have gone to blame it on others. Even Teederr implies that management claims it was not able to obtain financing because of a proxy fight. I'm not sure how long Teederr has been following this company but obviously not for more than 6 months. Thermo Tech had problems with financing and operations far before shareholders clued into management's deficiencies.
Instead of owning to mistakes, they blame people: the lawyers, the dissident shareholders, Trooper -- it's never their fault. Either they are some of the unluckiest people alive, or I think they have not properly identified the problem.
6. Ignoring the fiduciary duty that they have to shareholders
Rene bought 260K shares for $1M during the year when I believe the shares were trading for around $1 not to mention while increasing his salary to himself to 200K if I'm not mistaken. All the while, the company flirts with the possibility of bankruptcy and the assets and earnings per share trickle (not to mention share price) trickle closer and closer to zero.
7. Lack of honesty and integrity.
One need only compare what Thermo Tech was saying in public to what they were doing in court while Trooper was suing Thermo Tech for an order of specific performance. In fact Judge Cohen of the BC Supreme Court pointed out that the testimonies of Rene Branconnier and that of Dan Cummings were contradictory.
At the beginning of the lawsuit, Thermo Tech tried to stake the moral high ground saying that they did not hand over the documents to protect Trooper shareholders because of the plants are not viable in Poland. In fact, it was testified to by Stan Lis that Rene told Trooper that if Trooper didn't Joint Venture with Thermo Tech, TTRIF would not hand over the necessary documents -- a flagrant violation of the contract. Thermo Tech has also been in contempt since January -- if you followed the legal case. Yet the reasons for not handing over the documents changed several times over the course of the legal battle. Violating the terms of the contract was not on advice of counsel but it was a willful act by management to blackmail Trooper into negotiating a better contract with Thermo Tech. Nothing more nothing less.
Again despite changing lawyers twice, Rene continued to blame legal counsel. Two incompetent lawyers one after another despite great reference to credentials of each in the past?
8. Incredible Dilution.
The counter charge to the incredible amount of dilution is that Rene had no choice. Sorry, but I just don't buy it. Maybe I might have bought it if they didn't try to deceive shareholders as much. But consider this: After the Reg S financing, they said that it was unfortunate but they just had to do it because they could raise financing no other way. Almost immediately after Reg S, they then did a Reg D financing probably causing just as much if not much more dilution. And since the beginning of August, they have sold an additional 22 million shares and now we learn of another 6M private placement at already low prices -- this despite the fact that management has kept on saying that this equity financing would be the last one since the Reg S deal! What will it take? How many broken promises until you start to doubt management's ability?
What did they also do in August? If you have been a shareholder for any significant amount of time, you know that Thermo Tech cancelled the first announcement of "non recourse debt financing" by saying that a guy had missed their flight from Miami. (That must be one awfully long flight if it still hasn't gotten here by now -- where are they going? Toronto by way of Timbuktu?). Instead of financing, the next day we learn that Thermo Tech has sponsored a car race. Given the minimum of hundreds of thousands of dollars to support such endeavors (if not millions over the course of the contract), why did they do it if they were short of cash? This was even after the dissident shareholder group got moving. When I learned of the car race, I thought it was just a prank -- until I saw it in technicolor. Again, what does car racing have anything to do with building waste management plants?
My apologies to those who find my sarcasm harsh. The fact of the matter is, there are very very few reasons to support Thermo Tech's slate of directors. I hope that last statement did not come as a shock to anyone.
The reality is that Thermo Tech has a viable product that has been squandered over the past few years. Thermo Tech's management has promised castles built on clouds without delivering. Thermo Tech's management has even gone outside of its way to contradict themselves in court and to the public. Now shareholders are being asked to support current management because of more promises. They lied before. They lied in court. Why are they telling the truth now? These are promises that have been broken in the past and promises that will again be broken in the future.
Why will Thermo Tech's management satisfy their promises now when they were unable to in the past? Because their jobs are on the line? For those of you who believe so, is the only way to get Thermo Tech's management to create shareholder value by threatening to fire them? What about in the future?
For those of you who believe if Rene goes, so will financing, if you honestly believe in the technology, you will let Rene go. Have a look at the number of shares that has grown since the past three months. Why would you allow him to continually sell away the company diluting the share base like there has been no tomorrow? If it's only because you invested in Thermo Tech because it holds a solution to the world's problems, you might as well give all your money away to Greenpeace and I bet it would be much more effective.
For those of you who still support Thermo Tech's management, one question: Why? A few facts would be nice, we're not even asking for all that many -- it would certainly beat the fluff that has been posted by your brethren to date by simply parroting the proven empty promises of management. If you want to throw your money away, go to Vegas. If you want Thermo Tech succeed, there is really only one viable alternative.
Clement |
