Lembit Janes Sets Record Straight and Encourages Unitholders of SIR Royalty Income Fund to Vote for Positive Change

• Mr. Janes responds to SIR Corp.'s "alternative facts"
• Mr. Janes files proxy circular and encourages unitholders to vote by 9:00 p.m. (Toronto time) on Thursday, June 24, 2021, using the BLUE proxy
• Unitholders questions? Contact Laurel Hill Advisory Group at 1-877-452-7184 or assistance@laurelhill.com for more information

TORONTO, June 4, 2021 /CNW/ - Lembit Janes, the largest independent unitholder of SIR Royalty Income Fund (TSX: SRV.UN) (the "Fund"), announces the filing of a proxy circular and a BLUE proxy on the Fund's SEDAR profile at www.sedar.com in connection with the annual general meeting of unitholders of the Fund to be held on June 29, 2021 (the "Meeting"). Mr. Janes also wishes to thank the numerous unitholders who continue to contact him on an unsolicited basis to express support for reconstituting the board of trustees of the Fund (the "Board").

Mr. Janes is also setting the record straight regarding various misstatements set out in the June 2, 2021 press release and June 1, 2021 management information circular of the Fund. In this regard, Mr. Janes noted, "I was shocked by the extent of the misleading comments made by the Fund in its recent disclosures. Many of these statements are not based on facts and I believe are meant to confuse unitholders, as well as to gloss over SIR Corp.'s continued pattern of acting against unitholder interests. Based on discussions with unitholders, I feel compelled to provide a response so that unitholders have all the facts."

• Alternative Fact: It is not clear what Mr. Janes' end goal is

TRUTH: My goals have always been made clear through public disclosures and in conversations with the trustees of the Fund and with SIR Corp. ("SIR"). I have been a unitholder of the Fund since September 2010, purchasing units at that time at prices above $10 per unit. As a firm believer in the long-term value of the units, my first goal was to put an end to the highly opportunistic and shocking proposal announced on January 6, 2021 by SIR to acquire the Fund at $3.55 per unit.  Having achieved that goal, and accepting SIR's unequivocal statement that it would not participate in any strategic process that may be undertaken by the independent trustees of the Fund to enhance unitholder value, I focused on three goals as disclosed in my April 12, 2021 press release: (i) the restoration of distributions to unitholders in the near term, (ii) more transparency and unitholder engagement, and (iii) a more robust pursuit of plans to maximize unitholder value for all unitholders. Having forced the Board to address the first of such three goals, I remain focused on the last two.  I have always made it clear to Mr. Peter Fowler, the CEO of SIR Corp., that I have no intention of acquiring control of the Fund and any statement to the contrary is simply false.

These last two goals can best be achieved by electing myself, Stephen Dewis and Michael Fisher (collectively, the "Unitholder Nominees") as independent trustees at the Meeting. See "Time for Action" below. I will also support the election of (i) SIR's nominees (Peter Fowler and Kim van Nieuwkoop) since SIR has a contractual right to two Board seats and (ii) Sandra Levy.

• Alternative Facts: The trustees have been acting in the best interests of the Fund and its investors to seek to ensure the continued viability of SIR Corp.

TRUTH: Renegade Chicken is just one example of SIR and the trustees disregarding the interests of unitholders. Renegade Chicken operated out of 26 Jack Astor's locations utilizing Jack Astor's staff and point-of-sale processes. Nevertheless, SIR took the position that the revenue derived from Renegade Chicken sales was solely for its own benefit. Only when I publicly raised this issue did SIR relent and agree to a supposedly "voluntary payment to the Fund" of $100,000 and then discontinued using Jack Astor's for the sale of Renegade Chicken.  Why did the independent trustees of the Fund accept this outrageous conduct by SIR?  It is also interesting to note that, on June l, 2021, SIR appears to have posted a job for "Director of Marketing – Jack Astor's & Renegade Chicken". As previously noted, there is a lack of transparency that appears to only be rectified on an issue-by-issue basis after complaints have been registered, or by sending demand letters from counsel.

• Alternative Facts: Mr. Janes seeks control of the Fund. On May 21, 2021, in order to seek to ensure a clear and transparent process is followed, the Board of Trustees adopted an advance notice by-law

TRUTH:  In settlement negotiations, SIR rejected my proposal of three nominees selected by SIR, three nominees selected by me, and one nominee independent of everyone else.  It is clear now that the advance notice by-law is a desperate attempt to entrench the current trustees. I have never sought to control the Board. The other Unitholders Nominees are not beholden to me and we have no business relationships. In fact, the key difference between my proposal and that of SIR's during our negotiations is that they wanted to keep four of the seven Board seats and I was prepared to nominate only three with a fourth being someone independent from everyone else.  Having failed to negotiate maintenance of control, the Board sought to achieve that goal by implementing the advance notice by-law. The timing chosen by the Board to implement the by-law prevents additional nominations after the Board publicly disclosed that they were seeking to stack the Board with nine trustees. Faced with the likelihood of losing the vote, they have sought to increase the size of the Board to ensure that the Unitholder Nominees maintain a minority position. This is an abuse of the use of advance notice by-laws.  Furthermore, at a time when the Fund is supposedly concerned with expenses, the trustees have decided to burden it with the cost of maintaining nine trustees – almost doubling the size of the Board – in order to protect the interests of SIR. Does any company of this size have or need nine directors/trustees?

• Alternative Facts: Board of Trustees is committed to renewal and refreshment; Mr. Janes may not be considered independent for audit committee purposes

TRUTH: There has been no change in the three independent trustees since the Fund's IPO in 2004, and only now is the Fund considering changing one of them. That is not a focus on Board renewal. In fact, the key independent trustee, Mr. John McLaughlin, the Chair of the Board, has a long-standing relationship with the family of Mr. Peter Fowler. Based on documents filed on SEDAR, Mr. McLaughlin was a director of the Fowler family's investment company, Ken Fowler Enterprises Limited, in 2006. He was also a director of Jumbo Entertainment Inc., when Mr. Ken Fowler, Peter Fowler's late father, was Chair and apparently the largest shareholder. Additionally, according to a D&B Worldbase report, Mr. John McLaughlin sat on the board of directors of FHS Golf Management Ltd, at a time when Mr. Ken Fowler was chief executive officer.

Furthermore, the Fund has disclosed that in 2020, a special committee of the independent trustees was formed to "oversee the interests of the Unitholders in certain financing proposals being considered at the time by SIR Corp."  Notwithstanding that the committee was struck to address the conflict faced with negotiating with SIR, SIR reimbursed the Fund the committee fee payments made to John McLaughlin and Peter Luit, being $52,516 and $59,678, respectively. 

With respect to the statements by the Fund that I may not be considered independent for audit committee purposes, there is no basis for this assertion, legal or otherwise.

• Alternative Facts: Mr. Janes' press releases have failed to accurately describe the circumstances facing the Fund and SIR, and the obligations owed by SIR and the Fund to SIR Corp.'s bank lender. It could be that he has failed to understand the situation properly

TRUTH: No evidence is provided to support this statement – for obvious reasons. It is interesting that I have also been accused of willing to play "hardball" with the bank because I requested that no agreements be entered into with the bank until after the Meeting. In fact, I had asked that no additional agreements be made by the Fund with the bank until the Board was reconstituted. I had hoped that our settlement negotiations would quickly lead to the reconstitution of the Board.  But to be clear, it would appear that only through my agitation did the Fund and SIR finally stand up to the bank to ensure that distributions resumed. The fact is that this concession was only obtained by the trustees days before facing a unitholder vote.

• Alternative Fact: Mr. Janes has a demonstrated history of litigiousness and disruption

TRUTH: The one case of litigation referred to by the Fund in my over 40 years of being in business was completely mischaracterized – my legal challenge was successful and supported by minority shareholders. The Fund correctly disclosed that a group of shareholders were attempting to take Sepp's Gourmet Foods Ltd. ("Sepp's") private via a court-approved plan of arrangement and I sought to block it but was unsuccessful at the lower court. However, the Fund failed to mention that I was successful on appeal to the British Columbia Court of Appeal as the Court of Appeal overturned the decision of the lower court approving the plan of arrangement. A group of minority shareholders also supported my appeal. Sepp's (and not me) then proceeded to seek leave to appeal to the Supreme Court of Canada, with such leave being denied in November 2002. This represents anything but disruptive litigiousness on my part. Rather, it is another example of me successfully taking action to protect minority shareholder interests.

• Alternative Facts: Mr. Janes should likely not have been buying Units in the market while SIR was seeking to negotiate a settlement with him.Mr. Janes' offer materials, press releases and legally required early warning report made no mention of any intention to subsequently seek control of the Fund, which we believe to be a material omission

TRUTH: As stated earlier, I have no intention to seek control of the Fund and I believe I have acted in accordance with all applicable regulatory requirements. 

Time for Action

Mr. Janes is soliciting proxies in support of, among other things, the fixing of the number of trustees of the Fund at six and the election of the Unitholder Nominees, being Stephen Dewis, Michael Fisher and Lembit Janes, as well as Peter Fowler, Sandra Levy and Kim van Nieuwkoop (collectively, the "Supported Management Nominees"), as trustees of the Fund.

Mr. Janes recommends that you vote FOR the fixing of the number of trustees of the Fund at six and FOR the election of the Unitholder Nominees and the Supported Management Nominees using the BLUE proxy form or BLUE voting instruction form.

YOUR VOTE IS EXTREMELY IMPORTANT. PLEASE VOTE NO LATER THAN
9 P.M. (TORONTO TIME) ON JUNE 24, 2021.
PLEASE SUBMIT THE BLUE PROXY USING ONE OF THE FOLLOWING METHODS:

If you do not have the BLUE voting instruction form with your unique control number, please contact your intermediary who may obtain your 16-digit control number representing the BLUE voting instruction form. For further assistance, unitholders may contact Laurel Hill Advisory Group at the coordinates below.

Unitholder Questions and Voting Assistance

Unitholders may contact Laurel Hill Advisory Group at 1-877-452-7184 (416-304-0211 outside North America) or email assistance@laurelhill.com.

Additional Information

This disclosure is required under section 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations ("NI 51-102") and Mr. Janes has today filed an information circular under the Fund's profile at www.sedar.com containing, among other things, disclosure required under section 9.2(6) of NI 51-102 in respect of the Unitholder Nominees in accordance with securities laws applicable to public broadcast solicitations. Unitholders are strongly encouraged to review the information circular. Mr. Janes intends to solicit proxies by the mailing of the information circular and/or public broadcast.

This press release and any solicitation made by Mr. Janes in advance of the Meeting is, or will be, as applicable, made by Mr. Janes, and not by or on behalf of the management of the Fund. All costs incurred for any solicitation will be borne by Mr. Janes (directly or indirectly). Mr. Janes has entered into an agreement with Laurel Hill pursuant to which Laurel Hill has agreed to provide certain consulting and related services.

Any proxies solicited by Mr. Janes in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian securities laws will be conveyed by way of public broadcast, including press release, speech or publication, and by any other manner permitted under applicable Canadian laws. In addition, such solicitation may be made by mail, telephone, facsimile, email or other electronic means as well as by newspaper or other media advertising and in person by Mr. Janes or his associates or affiliates.

A registered unitholder who has given a proxy may revoke the proxy (i) by completing a proxy signed by the unitholder or by the unitholder's attorney authorized in writing bearing a later date and depositing it with the transfer agent of the Fund; (ii) by depositing an instrument of revocation in writing executed by the unitholder or by the unitholder's attorney authorized in writing: * at the head office of the Fund (namely, Suite 200, 5360 South Service Road, Burlington, Ontario L7L 5L1) at any time up to and including the last business day preceding the day of the Meeting, or any adjournment of the Meeting, or (y) with the Chairperson at the Meeting, prior to the exercise of the proxy; or (iii) in any other manner permitted by law. A non–registered unitholder may revoke a form of proxy or voting instruction form given to an intermediary at any time by written notice to the intermediary in accordance with the instructions given to the non-registered unitholder by its intermediary. Non-registered unitholders should contact their broker for assistance in ensuring that forms of proxies or voting instructions previously given to an intermediary are properly revoked. None of Mr. Janes, or, to his knowledge, any of his associates or affiliates, has any material interest, direct or indirect, in any transaction since the commencement of the Fund's most recently completed financial year, or in any proposed transaction which has materially affected or will materially affect the Fund or any of its subsidiaries. None of Mr. Janes or, to its knowledge, any of his associates or affiliates, has any material interest, direct or indirect, by way of beneficial ownership of securities or  otherwise, in any matter to be acted upon at the Meeting, other than as set out herein.

Based on public disclosure documents, the Fund's principal and head office is located at 5360 South Service Road, Suite 200, Burlington, Ontario, L7L 5L1.

Mr. Janes has filed this press release, which contains the information required by section 9.2(4)(c) of NI 51-102, and an information circular which contains the information required by section 9.2(6) of NI 51-102 and Form 51-102F5 Information Circular in respect of the Unitholder Nominees, under the Fund's profile on SEDAR at www.sedar.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release, including statements regarding the reconstitution of the Board and the goals of Mr. Janes to improve transparency and unitholder engagement and maximize unitholder value, contain "forward-looking statements" and are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties that could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects", "intends", "anticipates", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Although Mr. Janes believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Material factors or assumptions that were applied in formulating the forward-looking information contained herein include that the Board will be reconstituted by Mr. Janes at the Meeting, that there will be no further unplanned material changes to SIR's facilities, operations and customer and employee relations and that neither SIR nor the Fund will take any action to restrict rights currently held by unitholders. Mr. Janes cautions that the foregoing list of material factors and assumptions is not exhaustive. Many of these assumptions are based on factors and events that are not within the control of Mr. Janes and there is no assurance that they will prove correct. Important factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements include, among other things, the impact of the COVID-19 pandemic; breaches of material agreements entered into by SIR, the Fund or their respective affiliates; industry risk and other risks inherent in the running of the business of SIR and the Fund; legal proceedings and challenges to intellectual property rights; dependence of the Fund on the financial condition of SIR; and legislation and governmental regulation. These are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of Mr. Janes' forward-looking statements. Other unknown and unpredictable factors could also impact its results. Many of these risks and uncertainties relate to factors beyond Mr. Janes' ability to control or estimate precisely. Consequently, there can be no assurance that the actual results or developments anticipated by Mr. Janes will be realized or, even if substantially realized, that they will have the expected consequences for, or effects on, the Fund or SIR and their respective future results and performance. Forward-looking statements in this press release are based on Mr. Janes' beliefs and opinions at the time the statements are made, and there should be no expectation that these forward-looking statements will be updated or supplemented as a result of new information, estimates or opinions, future events or results or otherwise, and Mr. Janes disavows and disclaims any obligation to do so, except as required by applicable law.

SOURCE Janes Acquisition Corp.