KEYC - Cornwall Capital Sends Letter to Keweenaw Land Association Share

Cornwall Capital Sends Letter to Keweenaw Land Association Shareholders Highlighting Board Entrenchment

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Urges Shareholders to Vote the WHITE Proxy Card “FOR” Cornwall’s Three Highly-Experienced Nominees


Cornwall Capital Management, LP (“Cornwall”), an investment manager whose funds beneficially own approximately 26% of the outstanding shares of Keweenaw Land Association, Limited (OTC Pink: KEWL) (“Keweenaw” or the “company”), is today sending a letter to Keweenaw shareholders highlighting the company’s deeply entrenched Board of Directors, whose irresponsible governance practices and lack of accountability have led to significant shareholder value destruction at the company.

In connection with Keweenaw’s Annual Meeting of Shareholders to be held April 12, 2018, Cornwall urges all shareholders to vote the WHITEproxy card “FOR” Cornwall’s three highly-experienced, independent nominees, who pledge to bring the fresh perspectives and skillsets necessary to restore value at Keweenaw.

The full text of the letter is below and also available at:

March 8, 2018

Fellow Keweenaw Shareholders,

Keweenaw Land Association, Limited’s (“Keweenaw” or the “company”) April 12th Annual Meeting is just over a month away, and I am requesting your support in this critical election.

In just a few weeks, you will have the opportunity to rejuvenate the board with Cornwall’s three highly-experienced nominees, who bring fresh perspectives and have the necessary skill-set to help refine Keweenaw’s strategy in order to increase value for all stakeholders.

As a significant, long-term shareholder of Keweenaw, with beneficial ownership of approximately 26% of the outstanding shares, and as a minority board member since late 2015, I have witnessed firsthand the board’s irresponsible governance practices and lack of accountability to shareholders. I have become increasingly concerned that the board cannot be relied upon to act in the best interests of shareholders.

To that end and to ensure value destruction at Keweenaw stops immediately, Cornwall has put forth nominees we know well and trust, and who we are confident will serve as true fiduciaries to shareholders. I urge you to vote the WHITE proxy card FOR Cornwall’s nominees who will bring to bear deep experience implementing best practices in areas where the board is currently falling short to ensure the company regains its footing.


The Keweenaw board is intent on preserving the status quo to the detriment of all shareholders. Case in point:total returns to shareholders over the near-term (6 month, 1 year and 3 years) and long-term (10 years) have underperformed the S&P Global Timber & Forestry USD Index (a global benchmark for timber and forestry stocks) by a daunting 16%, 34%, 52% and 101%, respectively. In addition, the company has underperformed broader market indices such as the S&P 500 in a similar manner.

Keweenaw Land Association – Total and Relative Returns
  Performance Over

6 Months


12 Months


3 Years


10 Years

Total Return

Keweenaw Total Return +2% -1%-7%-23%
S&P Global Timber & Forestry USD Index +18% +33% +45% +78%
S&P 600 Forest Products +20% +23% +13% +73%
Timber Peer Group Average (1) +9% +15% +33% +189%
S&P500 +12% +16% +38% +153%

Keweenaw Relative Performance Versus

S&P Global Timber & Forestry USD Index   -16%   -34%   -52%   -101%
S&P 600 Forest Products -18%-24%-20%-96%
Timber Peer Group Average (1)   -7%   -16%   -40%   -212%
S&P500   -10%   -17%   -45%   -176%
Source: Bloomberg. Figures calculated in local currency terms and as of March 5, 2018.
(1) Timber peer group average includes Acadian Timber, Potlatch, Pope Resources and Catchmark Timber.


The Keweenaw board, whose four longest serving members have an average tenure of 30 years, prioritizes job security over the security of your investment. Aside from Cornwall’s current two Keweenaw board designees, only one other Keweenaw board member has served for less than 8 years.

Director   Reelection year   Year elected   Years on board
1   2020   1981   37
2   2019   1988   30
3   2019   1991   27
4   2020   1994   24
5   2018   2010   8
6   2018   2015   3
James Mai   2018   2015   3
Jan Loeb   2019   2016   2

The board’s job security has been maintained through a complex web of dated corporate defenses – including a staggered board, supermajority provisions, and limitations on shareholders’ ability to call shareholder meetings. Directors have dug in and isolated themselves from constructive dialogue with shareholders, even as the company’s flawed strategy continues to destroy value for shareholders.

Contrary to the company’s assertions, the so-called strategic review process was initiated before I joined the board in 2015. I believe that the strategic review was deeply flawed and wasted substantial time and resources.

Despite its domain expertise in timber, the company inexplicably failed to conduct industry-standard internal due diligence prior to commencing the sale process. Specifically, the company completed a comprehensive assessment of its timber inventory, the first such appraisal in the company’s history, after it concluded the sale process. While the inventory appraisal revealed timber inventory levels substantially higher than previously estimated, it is shocking that members of the board were even considering selling the company without such information. In fact, the company has been making decisions for years based on incorrect assumptions about its timber inventory, its core asset. Amidst this lack of understanding related to its inventory, the company made yet another acquisition at a substantially higher price than the company’s trading value, resulting in even more quantifiable value destruction.

There is a simple explanation for the board’s dysfunction and the obvious absence of management accountability: a small minority of long-standing board members exert undue influence, with effective control over all board and management decisions. As a result, the board’s ability to perform two of its most critical functions – determining the company’s strategy and overseeing management – is severely impaired.

An absence of proper oversight and accountability continues to put your investment at risk. And, going forward, it is clear the company has no strategy other than to take defensive steps that will preserve the incumbency of the legacy directors.


As a longstanding investor in Keweenaw and as its largest shareholder, Cornwall is deeply committed to the company and strongly aligned with its shareholders. To this end, Cornwall has nominated three directors who will restore responsible governance to Keweenaw and focus on the most important near-term objective: ensure value destruction at the company is immediately halted.

Our three nominees – Mr. Ian Haft, Mr. Steve Winch and Mr. Paul Sonkin – pledge to bring the accountability, oversight and experience required to serve as true fiduciaries to ALL shareholders and to help restore value at Keweenaw.

I strongly encourage you to vote your WHITE proxy card to protect your investment and ensure Keweenaw is put back on a track for success.


James A. Mai
Managing Member of Cornwall GP,
the General Partner of Cornwall Master LP

Important Information:

In connection with its solicitation of proxies for the 2018 annual meeting of Keweenaw Land Association, Limited (the “Company”), Cornwall Capital Management, L.P. and certain of its affiliates (collectively, “Cornwall”) intend to make available additional information to the shareholders of the Company. CORNWALL STRONGLY ADVISES ALL COMPANY SHAREHOLDERS TO READ ALL ADDITIONAL INFORMATION WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION.

Gasthalter & Co.
Jonathan Gasthalter/Amanda Klein
(212) 257-4170
Innisfree M&A Incorporated
Scott Winter
(212) 750-5833

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