Livermore Expresses Frustration with Status Quo; Support for Wholesale Board Change
NORTHBROOK, IL, Nov. 16, 2018 /CNW/ - Livermore Partners ("Livermore"), a private investment firm and investment manager to a shareholder of Detour Gold Corporation ("Detour"), today commented on the lack of engagement by the board of directors of Detour, Detour's disappointing Q3 results and the pressing need for wholesale change at the board of Detour.
Over the course of the last month Livermore has attempted to engage with the board constructively to discuss the serious issues confronting Detour. Livermore has in particular repeatedly urged the board to abandon its strategy of "delay, divert and distract" and to engage with Paulson & Co. Inc. ("Paulson") and Detour's other shareholders as responsible corporate stewards rather than self-interested managers. To our dismay, that has not occurred. Instead, this board, seemingly more entrenched than ever, continues to do all it can to avoid tackling the real and very serious issues confronting Detour.
It is shocking (at least to Livermore – Detour's other shareholders may be resigned to this sort of indifference) that despite all that has occurred at Detour over the last month, the board has refused to engage with Livermore (and apparently Paulson too) in any constructive manner and has instead limited its shareholder engagement to (i) attempting to put a cheery spin on objectively disappointing Q3 numbers and (ii) disseminating proxy materials that, while implicitly acknowledging the legitimacy and gravity of Paulson's concerns, advocate for only a topical and incomplete remedy.
Detour's proposal to nominate two of Paulson's nominees while leaving in place Chief Executive Officer Michael Kenyon and Chairman Alex Morrison is simply another instance of Detour feigning the appearance of change in an effort to persuade shareholders to retain the incumbent clubby core of directors (who, we note, will continue to earn generous salaries during this period), while doing nothing to address the failing of the incumbent board to enhance, or even preserve, shareholder value. This will not suffice. Messrs. Kenyon and Morrison have presided over the ongoing destruction of shareholder value in senior leadership roles and must be removed in order for any meaningful change to occur. Despite repeated assurances that Detour has a plan that is working, the stock price remains artificially depressed and operational results are dismal. A complete overhaul of the board is required.
The Detour Lake Gold Mine is a world class asset burdened with poor management, excessive executive compensation and ineffective and conflicted oversight. After extensive review and analysis, Livermore is of the view that at current spot prices Detour would receive an approximate 80% appreciation in value under capable management with appropriate governance in place. The existing leadership of Detour has already demonstrated that they are incapable of identifying, let alone realizing, this upside. Wholesale board change is a necessary first step in unlocking this substantial stranded value.
Livermore therefore once again urges the board to abandon its current posture of self-interested entrenchment and accept that they are no longer the right team to lead Detour. In an effort to preserve their generous salaries and to "win" at all costs, this board has lost sight of the fact that their job is to advance the interests of the shareholders. In the present circumstances, a "win" by the existing board will mean that all of us shareholders continue to lose. That outcome is not acceptable to Livermore and we will continue to advocate on behalf of the forgotten shareholders of Detour.
About Livermore Partners
Livermore Partners is an alternative asset investment manager servicing high-net worth individuals, institutional investors, and private-equity sponsors based in Northbrook, Illinois. We invest using a deep-value opportunistic approach and work diligently to help extract value in portfolio companies. For more information, please visit: www.livermorepartners.com.
Livermore is not acting jointly and in concert with any other party in disseminating this press release. The views expressed in this press release are those of Livermore alone, should not be attributed to any other person, and were formed based solely on Livermore's analysis of publicly available information. The information contained in this news release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable corporate or securities laws. Notwithstanding the foregoing, Livermore is voluntarily providing the disclosure required under subsection 9.2(4) of National Instrument 51-102 – Continuous Disclosure Obligations in accordance with securities laws applicable to public broadcast solicitations. Any solicitation made by Livermore will be made by it and not by or on behalf of the management of Detour. All costs incurred for any solicitation will be borne by Livermore. Proxies may be solicited by Livermore pursuant to an information circular sent to shareholders after which solicitations may be made by or on behalf of Livermore by mail, telephone, fax, email or other electronic means as well as by newspaper or other media advertising, and in person by directors, officers and employees of Livermore, who will not be specifically remunerated therefor. Livermore may also solicit proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws, including through press releases, speeches or publications, and by any other manner permitted under applicable Canadian laws. Livermore may engage the services of one or more agents and authorize other persons to assist in soliciting proxies on its behalf, which agents would receive customary fees for such services. If Livermore commences any solicitation of proxies, proxies may be revoked by an instrument in writing by a shareholder giving the proxy or by its duly authorized officer or attorney, or in any other manner permitted by law and the articles or by-laws of Detour. None of Livermore nor, to its knowledge, any of its associates or affiliates, has any material interest, direct or indirect: (i) in any transaction since the beginning of Detour's most recently completed financial year or in any proposed transaction that has materially affected or would materially affect Detour or any of its subsidiaries; or (ii) by way of beneficial ownership of securities or otherwise, in any matter proposed to be acted on by Detour. Detour's principal office address is Commerce Court West, 199 Bay Street, Suite 4100, Box#121, Toronto, ON M5L 1E2, Canada.
SOURCE Livermore Partners
For further information: David L. Neuhauser, Managing Director, Livermore Partners, 5 Revere Drive, One Northbrook Place, Suite 200, Northbrook, Illinois, 60062, USA, (847) 691-5307