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inca

n September, 2020, Muddy Waters was invited by the chief executive officer to provide the company with a financing term sheet. Accordingly, on Oct. 2, 2020, Muddy Waters submitted a term sheet at a share price that was a premium to the closing price on that day. Muddy Waters's understanding is that Mr. Mehra did not initially send this term sheet to the board. On Oct. 8, 2020, Muddy Waters submitted a second term sheet to the entire board at the same price. Later in October, Muddy Waters offered to purchase shares "on terms that are otherwise identical" (exact words) to the November offering, except at a price of $1.35 per share. Muddy Waters offered 8 per cent more than what the company ultimately received in the November offering, which was $1.25 per share. When GTT finalized the offering, Muddy Waters learned why its offer had been turned down: Mr. Mehra and Mr. Rutherford had bought approximately 27.6 per cent of the dilutive offering. In particular, Mr. Rutherford approximately trebled his holdings at the dilutive price.

Muddy Waters made numerous attempts between Oct. 2 and Oct. 27 to engage with Mr. Mehra about its more favourable offers. When those attempts were thwarted in favour of the self-dealing transaction, Muddy Waters then purchased additional shares in the open market. In contrast to Muddy Waters, neither Mr. Mehra and Mr. Rutherford have purchased a significant number of shares on the open market. While such self-serving practices might have been embedded in the culture of Marc Rich & Co. Investments (where Mr. Mehra spent much of his career), Muddy Waters is determined to see substantially higher standards of governance prevail at GTT.