Spruce Point Capital Management Exposes Additional Corporate Governance Risks At GFL Environmental Inc. (NYSE/TSX: GFL)

Issues Letter to Board Scrutinizing the Suitability of Lead Independent Director Dino Chiesa, Who Called Spruce Point's Research "Baseless" and Retains "the Utmost Confidence in Management"

Highlights That Mr. Chiesa is Chairman of Sienna Senior Living (TSX: SIA), Which the Canadian Press Says is Under Criminal Investigation and Faces Hundreds of Millions in Lawsuits Stemming From COVID-19 Deaths

Questions Mr. Chiesa's Ability to Function as GFL's Lead Independent Director and Serve as a Check on Chairman and CEO Patrick Dovigi While Devoting his "Full Time" to Sienna

Reiterates a Strong Sell Research Opinion and Encourages Investors to Review Spruce Point's 107-Page Report

NEW YORK, Sept. 23, 2020 /PRNewswire/ -- Spruce Point Capital Management, LLC (together with its affiliates, "Spruce Point"), a New York-based investment management firm that focuses on forensic research and short-selling, today issued an open letter to the Board of Directors of GFL Environmental Inc. (NYSE: GFL and GFLU and TSX: GFL) ("GFL" or the "Company"). The letter exposes additional evidence of insufficient and poor corporate governance at GFL, specifically pertaining to Lead Independent Director Dino Chiesa. As a reminder, Spruce Point issued a 107-page report on August 18, 2020 entitled "Green for Life, Red for Losses" that outlines why shares of GFL face 100% downside risk. GFL has still not publicly addressed any of the "inaccuracies" alleged in our report. The full report can be downloaded and viewed at www.sprucepointcap.com.   

The full text of the letter is below.

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September 23, 2020

The Board of Directors
GFL Environmental, Inc.
100 New Park Pl Suite 500
Vaughan, ON L4K 0J3, Canada
Attn: Paolo Notarnicola, Chair of the Nomination, Governance and Compensation Committee

Mr. Notarnicola,

Spruce Point Capital Management, LLC (together with its affiliates, "Spruce Point") continues to believe that GFL Environmental, Inc. ("GFL" or the "Company") is plagued by an array of corporate governance weaknesses, disclosure lapses, financial control and reporting issues, and operational and strategic flaws. With each passing day, we are finding additional evidence in support of our view that the Company's shares are uninvestable for institutions and face 100% downside risk. We are contacting you today because you are the Chair of GFL's Nomination, Governance and Compensation Committee (the "Committee") and presumably understand the importance of having a credible, integrity-rich Lead Independent Director at a company with a combined chairman and chief executive role. In our view, GFL does not currently have one.

In response to Spruce Point's 107-page report issued on the morning of August 18, GFL issued the following statement in the afternoon from Lead Independent Director Dino Chiesa:

"We are very disappointed by the baseless report put out today by Spruce Point Capital […] Spruce Point has never engaged with the company and the report is without merit. We have the support of our shareholders and the utmost confidence in management, who have held themselves to the highest ethical standards. We continue to believe in the strategy of the business and its focus on creating long term shareholder value."

We contend that Mr. Chiesa lacks the ability to make such a declaration and is unfit to serve as a public company director. Mr. Chiesa's current tenure as Chairman of Sienna Senior Living ("Sienna"), which is currently under criminal investigation and faces hundreds of millions of dollars in lawsuits, has become an unmitigated disaster. Sienna's alleged abuse and negligent actions towards senior citizens are believed to have contributed to more than 110 deaths over the course of the COVID-19 pandemic in 2020. The organization's practices have been well chronicled in a report issued by the Canadian Armed Forces, which observed shocking patterns of underfeeding, improper wound care, and general patient negligence at Sienna's Altamont Care Community. An independent report issued on June 16 by Global News reveals that, through June, more COVID-related deaths had occurred at Sienna-owned-or-operated facilities than any other long-term care provider in Ontario, despite Sienna being only the third-largest long-term home operator in the province by facility count. Sienna's disturbingly poor record through the COVID pandemic and reports of mistreatment of its patients during a national health crisis raise serious questions as to Chiesa's ability to oversee any company effectively.

Further, we wonder how Mr. Chiesa had the time and wherewithal to even review Spruce Point's lengthy report on August 18 when he told The Toronto Star in June that he is "working full time trying to straighten out what's going on at Sienna Senior Living." In fact, Sienna's issues have been so enormous and time-consuming that Mr. Chiesa, by his own admission, has been forced to step away from his duties as Chairman of CreateTO to commit his full time and attention to Sienna. If Mr. Chiesa does not have enough time to attend to his duties as a Director of CreateTO, why has he not also stepped away from his identical role at GFL – an aggressively-acquisitive, multinational, multi-billion dollar company whose Board duties are likely at least as time-consuming as CreateTO's? If nothing else, it seems to us that an individual embroiled in a national health scandal and working "full time" to manage a corporate crisis is not best equipped to serve as GFL's Lead Independent Director, especially in the wake of the issues highlighted by Spruce Point pertaining to the Company's acquisitions, financials, and c-level business affiliations. Perhaps having a preoccupied and weak Lead Independent Director has enabled Chairman and Chief Executive Officer Patrick Dovigi to maintain what we believe are highly-questionable connections to individuals with past criminal issues. These connections are outlined on various pages of our report if you and the Board would like to reacquaint yourselves with Mr. Dovigi's network.

As a senior leader at BC Partners, surely you are aware that your own firm touts taking "an active role in improving ESG awareness, performance and compliance in each portfolio company."¹ It appears to us that GFL is striking out on all three fronts when it comes to the environment, governance and social stewardship. Perhaps you can use your role on the Committee to assess, acknowledge and address GFL's numerous issues ahead of a potential regulatory action or financial collapse. We believe both outcomes are highly likely on the Company's current trajectory.  

Sincerely,

Ben Axler
Founder and Chief Investment Officer
Spruce Point Capital Management

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Please note that the items summarized in this press release are expanded upon and supported with data, public filings and records, and images in Spruce Point's full report. As a reminder, our full report, along with its investment disclaimers, can be downloaded and viewed at www.sprucepointcap.com.

Spruce Point has a short position in securities tied to GFL and stands to benefit if its share price falls.

About Spruce Point

Spruce Point Capital Management, LLC is a forensic fundamentally-oriented investment manager that focuses on short-selling, value and special situation investment opportunities. Spruce Point Capital Management, LLC is a member of the Financial Industry Regulatory Authority, CRD number 288248.

Contact

To contact Spruce Point, please reach us online.

¹ https://www.bcpartners.com/about/responsibility

SOURCE Spruce Point Capital Management, LLC

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