OPEN LETTER TO THE SHAREHOLDERS OF GATEGROUP Montag, 21. März 2016 - 18:00

RBR Capital Advisors / Key word(s): Miscellaneous
OPEN LETTER TO THE SHAREHOLDERS OF GATEGROUP

21.03.2016 / 18:00

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March 21, 2016

Dear shareholders of gategroup,

Gerard van Kesteren has courageously accepted to be proposed for
re-election by the very same board that had unanimously voted to oust him
only a month ago. Everybody who knows Gerard van Kesteren understands that
this was not a light-hearted decision for him. We understand that Gerard
only accepted the invitation to re-join the board with the guarantee that
corporate governance at gategroup will be substantially improved. Also
according to our understanding Gerard van Kesteren demanded among others
the following:

             1. The current chairman Andreas Schmid announces to step down
                after a year as the chairman of gategroup;

             2. Several concrete measures to improve corporate governance
                and operating performance at gategroup.

As we understand from today's press release from gategroup the first
requirement has been met. Given that this was a negotiation between the
company and Gerard van Kesteren as a candidate we believe Gerard van
Kesteren has the right to inform you about the decision making process
should you, the shareholders, ask him. We encourage you to do so as it is
an important element to get the full picture and will enable you to cast an
informed vote at the upcoming AGM. We are excited by the progress that
Gerard van Kesteren has achieved in such a short period of time.

Nevertheless, we remain concerned and are convinced that much more needs to
be done to restore proper corporate governance and a healthy state of
affairs at gategroup. Let us just review the board's decision to reinstate
Gerard van Kesteren: only a month ago the board unanimously voted to
dismiss Gerard van Kesteren and commented negatively on his performance as
board member. Now they backtrack without any change of the material facts.
Even though we appreciate that the board has reversed the decision to
dismiss Gerard van Kesteren it doesn't alleviate the fact that the initial
decision was a serious mistake, which now risks hampering target-oriented
decision making within the board. Last year gategroup spent CHF 1.5 million
of shareholders' money to fight its largest shareholder and avoid a fair
vote at the AGM. In speeding up the process of renewal, the board would
have an opportunity to limit this wasteful spending.

Gategroup listed in 2009 with an excessive management and board
re-numeration package with no operational targets attached. Chairman
Andreas Schmid still holds roughly 250'000 shares which are currently worth
about CHF 10 milion from that program. The infamous fraud case from 2011
had no consequences for any of the board members that remained comfortably
in their seats despite a clear lack of control and oversight. Failings in
corporate governance are ongoing and detailed in our previous letter to the
board and shareholders as well as the attached presentation.

Furthermore, despite management claiming the opposite, operating
performance continued to deteriorate significantly in 2015. While local
currency sales grew by 3.3%, the number of employees increased by 4%
leading to deterioration in productivity. Other operating expenses
excluding restructuring cost increased by 7% in CHF and dramatically more
in local currency. The most shocking increase came in consulting and legal
fees which increased by over 35% in CHF to CHF 41 million. To claim that
cost cutting is on track is preposterous.

We believe it is appropriate to give the new management some time to
execute on improving operating margins to an acceptable level. But we do
not believe that after eight years of mediocre performance and weak
corporate governance chairman Andreas Schmid should be re-elected even for
one year.

In addition, if you wish to express your own observations as a significant
shareholder of gategroup with ISS, the proxy voting consultant, you may
contact Nelson Seraci who covers gategroup:
Nelson.Seraci@issgovernance.com.

As the largest shareholder in gategroup, we have made abundantly clear that
it is not our intention to gain undue weight or influence on the board of
directors. Our desire is to find the best possible leadership to make
gategroup great again. We are open to a compromise to get the deal all
shareholders deserve. In this spirit we are prepared to offer Andreas
Schmid to pull back the candidacy of Rudolf Bohli for the board if he
retires already this year. We support Nils Engel's candidacy as he is a
strong candidate who will work towards bringing about the right change.

As far as the succession plan for chairman Andreas Schmid is concerned, we
are very excited to report that we have had discussions with several very
high profile candidates who are willing to accept the chairmanship once it
is vacated. Needless to say that such a decision should not be rushed as a
proper due diligence is required. Nevertheless we believe with the good
faith of all parties involved, a successor could be announced within a few
weeks. To conduct such a process ahead of the AGM seems unrealistic.
Nevertheless, assuming that the current chairman is not being re-elected,
we are convinced that the current board has more than enough qualified
members to be able to fulfil its mandate in the interim.

In case Andreas Schmid is unwilling to step down ahead of the AGM, we
recommend you to vote at the AGM to:

  - Not re-elect Andreas Schmid as chairman or a member of the board

  - Not re-elect Remo Brunschwiler and Anthonie Stal for the board of
    directors

  - Re-elect the other current members of the board including Gerard van
    Kestern as proposed by the board of directors

  - Elect Nils Engel as a new member to the board of directors

  - Elect Rudolf Bohli as a new member to the board of directors in case
    Andreas Schmid does not step down ahead of the AGM

Should you have any further questions or suggestions we would be delighted
to talk to you at your convenience.

 
Sincerely, 
 
RBR Capital Advisors AG
Rudolf Bohli

Cologny Advisors LLP
Jonathan Herbert