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Sep 12, 2019

Aimia shareholder group demands replacement of four board members

Aimia

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MONTREAL -- A group of shareholders at Aimia Inc. is seeking to overthrow half of the board, which presided over the sale of its flagship Aeroplan rewards program earlier this year as well as months of turmoil around control of the company.

The group, dubbed Aimia Shareholders for Accountability, filed a formal requisition with the company Thursday demanding a special meeting to replace the four longest-serving directors "in the interest of long-suffering investors."

Charlie Frischer, a Seattle-based investor who speaks for the group, is calling for himself and three others to take the place of chairman Bill McEwan, chief executive Jeremy Rabe and directors Thomas Gardner and Robert Kreidler, all of whom came on board within the past three years.

Aimia has lost about 70 per cent of its stock value since Dec. 1, 2016, when McEwan and Gardner joined the board, Frischer noted. He also pointed to its money-losing loyalty businesses, which saw a net loss of $74.9 million last year.

"Canadian shareholders deserve better. All shareholders deserve better. What we're offering is a more sensible, sane plan of not investing more money in loyalty, which has never shown an ability to profitably over time be a viable business," Frischer said in a phone interview.

He said his first move would be to sell, spin off or downsize the loyalty business and work to boost the stock price through share buybacks before any further acquisitions, relying for income on Aimia's 48 per cent stake in Aeromexico's loyalty program, PLM, and its 20 per cent share of AirAsia's loyalty program, Think Big.

Frischer said he is "highly optimistic" shareholders will be able to repopulate the board.

"I've probably heard from people that have 15 to 20 per cent of the shares that have said, `We support what you're doing...The course that management is taking is not acceptable to us. We do not believe in their skill set and we don't believe in their strategy."'

Frischer said he and another of the would-be directors have a combined stake in the beleaguered company of at least five per cent, enough to request the meeting.

Aimia acknowledged the requisition and said it will respond after reviewing it, stating that shareholders "are not required to take any action at this time."

"Aimia, under the leadership of a strong and renewed board of directors, has undergone significant positive change over the past 12 months with the input of its shareholders and other stakeholders, and is making good progress with its new strategic direction," the company said in a press release.

The call for a boardroom overhaul comes as the latest development in an ongoing battle over control of the Montreal-based firm.

Last summer, Frischer demanded a redo of the annual general meeting in June, which he characterized as "plagued with irregularities."

Earlier this week Mittleman Brothers LLC, Aimia's largest investor — which had "observed the same irregularities" — filed a countersuit against the loyalty company and six current and former members of the board.

In its lawsuit in July, Aimia accused Mittleman, which owns more than 23 per cent of the company, of continuing to advocate for radical change during a "standstill agreement" and attempting to orchestrate a covert campaign to encourage other shareholders to withhold their support for Aimia's nominees at the 2019 annual meeting.

Aimia sold the Aeroplan rewards business to Air Canada earlier this year for $450 million, leaving it with significant cash on hand but also questions about its future.

Aside from Frischer, Aimia Shareholders for Accountability nominated three would-be board members: Joel Schachter, a retired Goodmans law firm partner; David Rosenkrantz, co-founder of merchant banking firm Patica Corp.; and Michael Lehmann, founder of private partnership LARC Capital Holdings LLC.