May seek legal remedy
TORONTO, April 19, 2013 /CNW/ - Resource Capital Fund IV L.P. ("RCF IV") announced today that it is extremely disappointed at the decision by Selwyn Resources Ltd. (TSXV: SWN) to delay the voting on its board of directors. This decision frustrates the will of the majority of Selwyn shareholders and is evidence of entrenchment by the current board of directors. RCF IV fully supports the sale of the Selwyn zinc and lead project ("Selwyn Project") to Chihong Canada Mining Ltd. ("Chihong") and has already delivered a proxy in favour of the transaction. RCF IV has not committed to vote for any directors, but is appalled at Selwyn's reaction to its shareholder concerns. RCF IV will support nominees that commit to distributing the net proceeds of the Selwyn Project sale to all shareholders. RCF IV is currently the largest shareholder of Selwyn Resources, with an approximate 17.1% voting stake.
RCF IV feels that a last minute delay in voting for directors in the face of an alternate board slate being proposed is an improper exercise of the Chair's discretion and the Board's fiduciary duty and will hold all directors personally liable for any and all damages as a result of the meeting delay or any use of Chihong sale proceeds.
RCF IV believes that management and the current Board are more focused on protecting their jobs than doing what they know is right for shareholders. RCF IV has attempted to engage the Board in discussions to dissuade it from its intention to use the Selwyn project proceeds to invest in a risky, speculative new mine and these overtures have been met with indifference, even though the market apparently agrees with RCF IV's analysis. Since the announcement of the sale, the company's share price has traded below the net cash realization price, effectively attributing no value whatsoever for ScoZinc.
RCF IV has been a shareholder of Selwyn Resources since May 2008 and the company's major shareholder since August 2008. It has participated in, backstopped and/or lead non-brokered private placements in May and October of 2009 and August and July of 2010; exercised warrants early at the company's request in June 2010; and provided a $5 million bridge loan to precipitate the closing of the Chihong joint venture transaction. Through these actions and throughout this period, RCF IV was a supportive shareholder and all of its investments were directed at the Selwyn project.
The cash generated from the transaction with Chihong will net in excess of C$40 million after repayment of the Waterton debt facility. RCF IV believes that there are ample funds to provide a tax-efficient distribution of C$0.10/share to shareholders immediately after closing and still provide working capital for the company to find new shareholders to fund the development of ScoZinc.
RCF IV asks that the Board re-consider its announced intention to ignore shareholders and proceed with its plans to crystallize the destruction of shareholder value rather than distribute proceeds in excess of its current share price to its shareholders. Unfortunately, if the Board fails to commit to an equitable distribution of the Selwyn Project sale proceeds, RCF IV reserves the right to take any legal remedy available to it.
SOURCE: Resource Capital Funds IV L.P.
For further information:
RCF Contact: Russ Cranswick, Partner, +1 (720) 946-1453