TORONTO, Dec. 21 /CNW/ - West Face Capital Inc. ("West Face") said today that the recent actions of Maple Leaf Foods Inc. ("Maple Leaf"TSX: MFI) compound the governance issues facing the company. The newly created "Shareholder Relations Committee" is further evidence of the ongoing corporate governance weaknesses of the company.
"After pressure from shareholders and others, Maple Leaf has announced yet another committee to address its mushrooming corporate governance problems. Far from demonstrating responsiveness to shareholder concerns, the announcement of this 'Shareholder Relations Committee' demonstrates how disconnected the current board of directors is from good corporate governance practices. The solution is not more committees of the same directors, but a move towards true independence," said Thomas Dea, partner at West Face Capital.
The announcement of the creation of the "Shareholder Relations Committee" was the board's public response to continued efforts by West Face to reach an agreement between the board and the company's minority shareholders. West Face has requisitioned a special meeting at which shareholders would be given the opportunity to express their views on Maple Leaf's governance through non-binding advisory resolutions. The board has escalated a shareholder call for accountability into a hostile confrontation and formally rejected these overtures in a letter today.
"The board continues to resist real change and accountability. The announcement of this new committee changes nothing and raises as many questions about the board's conduct as it answers," said Mr. Dea.
With its recent steps, Maple Leaf is simply compounding its existing corporate governance problems:
- Maple Leaf announced the creation of the "Shareholder Relations Committee" more than six weeks after it claims the committee was created. Maple Leaf's recent prospectus, filed just last week, with the required enhanced disclosure, also made no mention of any "Shareholder Relations Committee". West Face continues to have concerns with disclosure by Maple Leaf.
- A "Shareholder Relations Committee", unheard of at other public companies, should be redundant at Maple Leaf if its Corporate Governance Committee and Special Committee of Independent Directors were functioning properly. West Face is concerned that the existing board and board committees cannot, or will not, properly manage shareholder concerns.
- Maple Leaf describes the members of the "Shareholder Relations Committee" as independent when a number of its members simply cannot be considered independent on an objective basis. West Face continues to be concerned that Maple Leaf's approach to independence is far too narrow. West Face believes a "friends and family" board is not in the best interests of the majority of Maple Leaf shareholders.
- The "Shareholder Relations Committee" is intended to meet with large shareholders to "seek their views on governance" yet has made no effort to contact West Face, a shareholder which owns more than 10% of Maple Leaf's shares and has made clear that it has concerns about governance at Maple Leaf. West Face believes the recent steps by Maple Leaf are simply designed to deflect attention from serious governance issues that remain outstanding.
- The "Shareholder Relations Committee" may be engaging in unlawful proxy solicitation in advance of the special meeting requisitioned by West Face. Maple Leaf has not filed a proxy circular in connection with that meeting.
"West Face believes that the board is simply compounding the governance problems facing Maple Leaf. Maple Leaf still does not seem to appreciate that its shareholders are best served by an independent board capable of making objective and balanced decisions about the company and its future," said Mr. Dea.
About West Face Capital
West Face Capital is a Toronto-based institutional investment manager with approximately $1.5 billion in capital under management.
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