Concerned Sherritt Shareholders Provide 12 Key Facts For Investors

HALIFAX, April 15, 2014 /CNW/ - The Concerned Shareholders of Sherritt International Corporation ("Sherritt") today reminded fellow shareholders of the relevant facts that should be considered as they determine how to vote at Sherritt's Annual and Special Meeting to be held on May 6, 2014.

The Sherritt Board of Directors, rather then responding to legitimate shareholder concerns, has instead tried to distract shareholders from the real issues by making offensive and irrelevant personal attacks on the Concerned Shareholder nominees. It has failed to take responsibility for the real problems at Sherritt.

The facts for Sherritt shareholders to consider now are:

1 – Sherritt's return, with dividends reinvested, was a loss of 55% for the three years prior to the Concerned Shareholders filing the requisition for a special meeting.

That is far worse than the performance of the overall market and the average of the companies Sherritt considers its peers. Responsibility lies with the Board, not commodity prices.

2 – Sherritt's Board and management are not aligned with the interests of the Company's shareholders.

They own less than 0.25% of Sherritt's common shares and their compensation is not tied to the creation of shareholder value. The Board needs true shareholder representation.

3 – Sherritt's directors paid themselves an average of more than $362,000 each in 2013, while shareholders saw the value of their investment destroyed.

That compensation includes special payments made for being barred from travel in the United States, even though most Directors are not affected. The majority of compensation is in cash, rather than Sherritt shares, which means there is no incentive for the Board to focus on share value.

4 – Sherritt's Board has paid the current CEO more than $5 million in the two years since they inexplicably appointed him in January 2012.

He had no operating or financial experience before he was named Chief Financial Officer nine months earlier. He received a salary increase last year despite presiding over rising costs, a drop in EBITDA, a falling share price and Sherritt being faced with a credit rating review which may result in a downgrade. 

5 – Sherritt has not allocated capital effectively.

It has written off $717 million, or $2.41 per share, in the past five years. It has wasted shareholders' money on the coal assets, certain power assets, and Sulawesi. It allowed the cost of Ambatovy to increase to twice the original budget.

6 – The Board and management have made no effort to control costs.

Despite low commodity prices, Sherritt's overhead increased to $99 million last year and operating costs rose in every division.

7 – Sherritt's Board was taking no meaningful positive action until the Concerned Shareholders' requisition.

It sold the coal assets, but did so before taking any steps to improve them and maximize value for shareholders. It "renewed" the Board by adding two directors; one owns a small number of Sherritt shares while the other owns none at all. Other than selling the coal assets at a discount, all the actions claimed by the Board were suggested by the Concerned Shareholders and would not have been acknowledged by the Board without the requisition.

8 – The Concerned Shareholders have nominated three experienced and highly qualified individuals to the Board.

One experienced nominee controls more than 30 times more common shares than the current Board and management. The other nominees also bring relevant experience and are committed to investing significantly in Sherritt to ensure they are aligned with all shareholders. The current Board has repeatedly rejected every suggested nominee affiliated with one of its largest shareholders, Clarke Inc.

9 – The Concerned Shareholders have described the value-creating steps its nominees would recommend to the majority of the Board after election.

These include: defining the company's strategy; aligning the interests of the Board, management and shareholders; undertaking a search for a qualified CEO; improving the capital allocations methodology, and; acting immediately to reduce Sherritt's excessive costs. More information about these common sense initiatives is provided in the Concerned Shareholder Information Circular which is filed on SEDAR and is available at www.SaveOurSherritt.com. 

10 – The Concerned Shareholders have complied fully with Sherritt's own rules to nominate Ashwath Mehra, David Wood and George Armoyan.

Sherritt's Board adopted its Advance Notice Bylaw on January 10, 2014, three weeks after the Concerned Shareholders' requisition for a special meeting. The Concerned Shareholders have complied with all the terms of the company's Advance Notice Bylaw.

The Bylaw is designed primarily for the benefit of an incumbent board, to protect it from surprise shareholder nominations at, or shortly before, an annual meeting.  It can also help ensure that shareholders have sufficient time to consider the election of nominees to the Board. By including the names of individuals it knew would not be nominees, and excluding information about the actual Concerned Shareholder nominees, the Board has circumvented the intention of its own Bylaw.

11 – Sherritt Knew Its Information Circular was Misleading.

At a March 24 meeting, Sherritt was advised that the Concerned Shareholders would be providing nominees in compliance with the Advance Notice Bylaw and those nominees would not include either Michael Rapps or Dustin Haw of Clarke Inc. This was 12 days before the deadline imposed by Sherritt's Advance Notice Bylaw and a week before it issued its Circular.

The Board could have provided its shareholders with accurate information, but chose not to. It may be correct that Sherritt has no obligation to include non-management nominees in its Circular, but the Board surely does have an obligation not to disseminate what it knows to be incorrect or false information to its shareholders.  

12 – Sherritt's Blue Proxy Allows Shareholders to Vote Only for the Management Nominees, but not for the Concerned Shareholders' Slate. 

The Board must recognize that it is impossible for Sherritt shareholders to have a fair election if the Company's ballot does not include the names of all nominees to the Board. Shareholders cannot use the management proxy to vote for Concerned Shareholder nominees. This is rigging votes before they are even cast and an attempt to disenfranchise shareholders, as well as an attack on their rights.

The Concerned Shareholders continue to call on Sherritt's Board of Directors to issue an amended Management Information Circular and to withdraw and replace the Company's blue form of proxy since the versions dated March 28, 2014 and mailed to shareholders contained false and misleading information.

In the absence of a valid management proxy, all Sherritt shareholders are advised to use the GREEN proxy provided by the Concerned Shareholders.

The complete Concerned Shareholders Information Circular can be downloaded at www.SaveOurSherritt.com and www.sedar.com.

Sherritt shareholders are advised to vote using the GREEN form of proxy that accompanies the Concerned Shareholders' Circular. They should disregard any proxy sent by Sherritt management and, even if they have voted a blue management proxy, they have the right to change their vote using a later-dated GREEN proxy. Only the last-dated proxy is counted.

In order for the GREEN proxy to be counted, it must be submitted consistent with the instructions on the proxy and must be received no later than 5:00 p.m. Toronto time on Thursday May 1, 2014.

Discard the blue proxy. Vote only the GREEN proxy for positive change at Sherritt.

Sherritt shareholders with questions can call 1-800-294-3174 or visit our website at www.SaveOurSherritt.com for more information.

About the Concerned Shareholders of Sherritt

Members of the Concerned Shareholders of Sherritt have been investors in the Company since May 2011. They are led by Halifax-based Clarke Inc. which invests in a variety of private and publicly-traded businesses and participates actively where necessary to enhance performance and increase the return to shareholders. Clarke's securities trade on the Toronto Stock Exchange (CKI; CKI.DB.A); for more information about Clarke, please visit the website at www.clarkeinc.com.

Statements Regarding Forward-Looking Information

This news release may contain forward-looking statements or forward-looking information within the meaning of applicable securities laws, including, without limitation, in respect of Clarke's and Sherritt's priorities, plans and strategies for Sherritt and Sherritt's anticipated financial and operating performance and prospects. All statements and information, other than statements of historical fact, included or incorporated by reference into this Circular are forward-looking statements and forward-looking information, including, without limitation, statements regarding activities, events or developments that Clarke expects or anticipates may occur in the future. Such forward-looking statements and information can be identified by the use of forward-looking words such as "will", "expect", "intend", "plan", "estimate", "anticipate", "believe" or "continue" or similar words and expressions or the negative thereof.

We caution readers of this news release not to place undue reliance on forward-looking statements and information contained in the news release, which are not a guarantee of performance, events or results and are subject to a number of risks, uncertainties and other factors that could cause actual performance, events or results to differ materially from those expressed or implied by such forward-looking statements or information. Sherritt's shareholders are cautioned that all forward-looking statements and information involve risks and uncertainties, including those risks and uncertainties detailed in Sherritt's continuous disclosure and other filings with applicable Canadian securities regulatory authorities, copies of which are available on SEDAR at www.sedar.com. We urge you to carefully consider those factors.

The forward-looking statements and information contained in this news release are expressly qualified in their entirety by this cautionary statement. The forward-looking statements and information included in this news release are made as of the date hereof and Clarke undertakes no obligation to publicly update such forward-looking statements or information to reflect new information, subsequent events or otherwise, except as required by applicable laws.

Additional Information

Sherritt has announced that it will hold its annual meeting of shareholders on May 6, 2014. The Concerned Shareholders' nominees will be considered for election at that meeting. The Concerned Shareholders filed a Circular on April 9, 2014, together with a GREEN proxy or voting instruction form. SHAREHOLDERS OF SHERRITT ARE URGED TO READ THE CIRCULAR CAREFULLY BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and shareholders will be able to obtain free copies of the Circular and any amendments or supplements thereto and further proxy circulars at no charge on SEDAR at www.sedar.com. In addition, shareholders will also be able to obtain free copies of the proxy circular and other relevant documents by calling the Concerned Shareholders' proxy solicitor, CST Phoenix Advisors at 1-800-294-3174.

SOURCE: Clarke Inc.

Shareholders: CST Phoenix Advisors, 1-800-294-3174, [email protected]; Dustin Haw, Vice President, Investments, Clarke Inc., 416.855.1928, 416.930.1982, [email protected]; Media: John Lute, Lute & Company, 416-929-5883, [email protected]