The changes aren’t over at lab-grown diamond producer Scio.
Three days after the Greenville, S.C.–based company appointed a new CEO and chief financial officer—who are now the fourth and third person, respectively, to serve in those positions in the company’s three-year history—the lab-grown diamond producer has reached an agreement with Save Scio, a group of dissident shareholders that has vociferously advocated for change in the company’s board.
As a result of the agreement, Robert Linares, the scientist who helped develop the original technology for Scio’s predecessor Apollo, has resigned from the board, as has his son-in-law Edward Adams, who served as board chairman. This marks the first time that Scio or Apollo has not had management involvement from the Linares family, says spokesman Joe Cunningham.
Also resigning is former Antwerp Diamond Bank head Theodorus Strous, who for a time served on a three-person board along with Linares and Adams.
A fourth board member, Gerald McGuire, who joined the board on May 29, is also resigning, as he has been appointed interim CEO. In addition, four members from Save Scio have joined the board, including its spokesman, Bernard McPheely, who served on the board in 2012 and 2013 but eventually resigned, expressing frustration with the company’s governance.
As to whether the CEO resignation and board restructuring were related, Cunningham says that the company wanted a “fresh start.”
“It is a changing of the guard,” Cunningham says. “The idea is to stop the noise and get down to business.”
He adds that the new arrangement could mean that several shareholder lawsuits against the company, which charged improprieties in the switch over from Apollo to Scio, might be dropped. The board has also dropped a so-called poison pill provision it adopted to fend off Save Scio.
Scio still faces financial challenges. It has yet to turn a profit, has accumulated $13 million in losses, and has a $1 million loan that matured on June 20, the day it was announced that the CEO and CFO resigned.
But Cunningham indicated the loan is being taken care of.
“It is safe to say the new board members would not come in if that were not going to be resolved,” he says.
McGuire, the new interim CEO, has a background in semiconductors, and last week’s release indicates Scio hopes to enter that market.
Cunningham says Scio still wants to produce gem diamonds, including at its joint venture in China.
“We see this as a potential game changer,” he says. “There is no shortage of demand for the product.”
“When you look at what these reactors create, what took nature millions of years to create, it is like God in a box,” Cunningham says. “It’s dazzling.”
Two people recently appointed to the board—current board secretary James Korn and chairman Bruce Likly, who previously worked with Apollo—are staying in those positions, Cunningham says.