Oasis Addresses Tsuruha's False and Misleading Statements and Urges Shareholders to Support the Appointment of Independent Outside Directors (Stock Code: 3391 JT)
Oasis Management Company Ltd. ("Oasis") is the manager to funds that beneficially own over 12.8% of drugstore operator Tsuruha Holdings Inc. (3391 JT) ("Tsuruha" or the "Company"). Oasis has adopted the Japan FSA's "Principles of Responsible Ownership" (a/k/a the Japan Stewardship Code) and in line with those principles, Oasis monitors and engages with its investee companies.
In June 2023, Oasis, a long-term shareholder of Tsuruha, announced its "Tsuruha Corp Gov" campaign, pointing out the corporate governance failures at Tsuruha, and asking fellow shareholders to support the corporate governance reforms proposed by Oasis at the upcoming Annual General Meeting ("AGM"), including the nomination of five highly qualified, independent, and diverse director candidates (collectively referred to as our "Proposals").
The changes proposed by Oasis aim to institute an independent oversight structure at Tsuruha that could improve the company's corporate governance practices and disclosures, with the goal of enhancing the Company's corporate value.
Oasis is disappointed that the Company has proposed the re-election of its incumbent Outside Directors, who all have questionable independence and experience not directly relevant for Tsuruha's strategic direction. Furthermore, these Outside Directors constitute a majority of the advisory Nomination Committee, which is now also opportunistically proposing the appointment of two new Outside Directors to fill all seats on Tsuruha's Board based on an opaque nomination process.
Misleading and False Statements Point to Failed Independent Oversight
On July 7, the Company announced that it was opposing all of Oasis's Proposals, without providing a genuine response to the concerns raised by Oasis or a fair evaluation of our independent Outside Director nominees (such as opposing Oasis's nominees because they don't have drugstore retail experience, while none of their nominees have any retail experience). Regrettably, the Company also misrepresented Oasis's statements in connection with our Proposals and referred to them as "misleading and an arbitrary manipulation of impression (image)". In their attempt to discredit Oasis's Proposals, Tsuruha's Board inadvertently made a number of false and misleading statements that have exposed further the weak independent oversight. If these false and misleading statements were intentional, Tsuruha's governance failures run deeper than Oasis's analysis, signaling the urgency of shareholders appointing qualified and independent Outsider Directors to properly oversee Tsuruha.
Some of the false and misleading statements, which Oasis has detailed in its updated presentation, include:
- Tsuruha's Performance: Tsuruha claims much of Oasis's analysis on the Company's stock price and business performance is misleading. Objectively, Tsuruha's relative underperformance and failure to create value in the mid-to-long term is evident using various different analyses. Oasis has detailed Tsuruha's absolute and relative underperformance. Tsuruha is misleading its shareholders on its performance track-record by selectively choosing the timeframe for evaluation.
- Corporate Governance Issues: Tsuruha continues to dismiss Oasis's concerns with its corporate governance practices and related-party transactions, while it quietly makes adjustments without providing any explanations to shareholders. For example, skills and experience previously not assigned to Directors in Tsuruha's Board Skills Matrix have now been assigned to them within a period of one year. Another example surrounds Mr. Hajime Tsuruha's retirement from his Director-Honorary Chairman role at Tsuruha Co., a subsidiary of Tsuruha Holdings which accounts for approximately 50% of the Company's consolidated revenue. Mr. Hajime Tsuruha had held this role, and influence, away from any shareholder oversight, for close to twenty years since his retirement as a Director at the Holdings Company. Until Oasis pointed this out on June 2, 2023, Mr. Hajime Tsuruha had remained in this role uninterrupted, and without acknowledgement. Tsuruha is misleading its shareholders by presenting a governance narrative that is not consistent with its actual practices.
- Relationship with North Pacific Bank: The Company claims that "North Pacific Bank has never been the financial institution with the largest amount of borrowings for the Company, nor has the Bank been the Company's ?main bank or similar entity'". According to company disclosures, North Pacific Bank has been the biggest lender to the Company from 1998 to 2001, and still remains a shareholder of Tsuruha today. Tsuruha is making false statements to its shareholders.
Urgent Need for Independent Counter-Balance to Family Control
We believe the disproportionate control in the hands of delegates from the three founding families (Tsuruha, Ogawa, and Murakami) has deteriorated the composition of the wider Board, leading to nepotism in the President role, and allowing the Company to function in siloes, restricting its standalone and non-organic growth opportunities. This has resulted in sustained stakeholder underperformance. Evidenced by the response from the Company to Oasis's detailed presentation, where rebuttals are unsubstantiated and misleading, it is clear that effective independent oversight is required on the Board of Tsuruha to oversee its strategic direction, oversee management, and ensure appropriate governance practices are in place to maximize stakeholder value.
It is time for all shareholders to act now to improve Tsuruha's board composition and governance, maximize independent oversight and corporate value, and create a brighter future for Tsuruha and all its stakeholders.
We call for all Tsuruha's shareholders to vote FOR the series of the corporate governance reforms proposed by Oasis (Proposals #3 through #11), including the nomination of five highly qualified, independent, and diverse director candidates to improve the Company's corporate governance structure and enhance its corporate value, and to vote AGAINST the Company's proposed incumbent outside directors (Ms. Harumi Sato and Mr. Takuya Okazaki of Proposal #2).
To learn more about Oasis's proposals and see the full response to Tsuruha's latest misleading statements, please visit www.TsuruhaCorpGov.com. We welcome all stakeholders to contact Oasis at [email protected] to help improve Tsuruha's Corporate Governance.
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Oasis Management Company Ltd. manages private investment funds focused on opportunities in a wide array of asset classes across countries and sectors. Oasis was founded in 2002 by Seth H. Fischer, who leads the firm as its Chief Investment Officer. More information about Oasis is available at https://oasiscm.com. Oasis has adopted the Japan FSA's "Principles of Responsible Institutional Investors" (a/k/a Japan Stewardship Code) and in line with those principles, Oasis monitors and engages with our investee companies.
The information contained in this press release (referred to as the "Document") is an information resource for shareholders in Tsuruha offered by Oasis, the investment manager to funds that are shareholders of Tsuruha (the "Oasis Funds"). The Document is not intended to solicit or seek shareholders' agreements to jointly exercise any voting rights with Oasis. Shareholders that have an agreement to jointly exercise their voting rights are regarded as Joint Holders under the Japanese large shareholding disclosure rules and they must file notification of their aggregate share ownership with the relevant Japanese authority for public disclosure under the Financial Instruments and Exchange Act. Oasis does not intend to be subjected to such notification requirement. The Document exclusively represents the opinions, interpretations, and estimates of Oasis.
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