Humpty Dumpty shareholders oppose C$5.97 million private placement

By Sheri Kasprzak

Atlanta, Feb. 3 - Three of Humpty Dumpty Snack Foods Inc.'s major shareholders said Thursday they oppose the company's C$5,971,000 private placement with Old Dutch Foods Ltd.

McElvaine Investment Management Ltd., Patrick Hodgson of Cinnamon Investments Ltd. and Tailwind Capital Inc., the three of which control about 48% of Humpty Dumpty's outstanding shares, said they may take legal proceedings to enjoin the deal.

The offering would place 25% of the company's outstanding common shares with Old Dutch.

"The transaction with Old Dutch is demonstrably not in the best interest of Humpty Dumpty or its shareholders," Hodgson said. "This transaction was entered into in anticipation of the upcoming annual meeting, is unfairly dilutive of existing shareholders and will, if allowed to stand, materially affect the outcome at that meeting and the ongoing proportionate voting and economic interests of all shareholders."

The companies also said they plan to nominate a new slate of directors for election to Humpty Dumpty's board of directors at its meeting March 29.

Humpty Dumpty chief executive officer George Schmalz did not respond to requests for comment on the opposition Thursday.

McElvaine controls 2,612,100 shares, or 27.9% of the company's outstanding common stock; Cinnamon controls 250,000 shares, or 11.8%; and Tailwind controls 861,587 shares, or 9.2%. In all, the companies own 1,713,278 shares, or a total of 18.3% of the outstanding common shares and control or direct 30.6%.

The original terms of the private placement call for the sale of up to 2,341,665 shares at C$2.55 each to a subsidiary of Old Dutch.

As part of the offering, Humpty Dumpty said it plans to reorganize its board of directors at its next scheduled meeting on March 29. A designee from Old Dutch, Steven Aanenson, will be nominated for appointment to the board at the meeting, Humpty Dumpty said.

Based in Kitchener, Ont., Humpty Dumpty markets and distributes snack food products. On Thursday, Humpty Dumpty's stock closed up C$0.05 at C$2.75.

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