Board Welcomes Dissident's Support for Its Value-Enhancing Actions
COEUR D'ALENE, Idaho, June 17 /CNW/ - WGI Heavy Minerals, Incorporated
(TSX: WG) today announced that Glass Lewis & Co., a leading independent proxy
advisory firm, has recommended that shareholders vote their WHITE proxy to
elect the Company nominees to the Board of Directors and reject the nominees
proposed by dissident shareholder Passport Capital LLC ("Passport" or the
"Dissident") at the Company's Annual General Meeting on June 25, 2008.
In making its recommendation, Glass Lewis & Co. said: "we do not believe
the installation of the Dissident nominees is necessary at this time. While
the Company's stock price has underperformed peers and relevant indices in the
past, we note that the Company's stock price has shown improvement over the
past year. Combined with steady improvement in the Company's operational
performance since fiscal 2005 and ongoing efforts to enhance performance (such
as the recent sale of assets), we see no reason to believe that the election
of the Dissident nominees would provide more meaningful returns to
shareholders than management's current strategy."
Glass Lewis noted that "we believe that incumbent management, with access
to more and better information regarding the company, should be given the
benefit of the doubt regarding its strategic business decisions."
In response to Passport's stated concerns about Chairman and former CEO
Covell Brown's pay, Glass Lewis & Co said: "we do not find Brown's overall pay
to be significantly outside the range of compensation for CEOs at
similarly-sized firms. Additionally, we note that the Company's compensation
committee is now composed entirely of independent directors. As such, we
believe these compensation issues do not warrant significant shareholder
WGI's current Board of Directors welcomed the recommendation from Glass
Lewis & Co as a knowledgeable and independent third party.
Dissident Supports Board's Value-Enhancing Actions
The Board also welcomed the expression of public support from dissident
shareholder Passport Capital LLC for the Company's announcement that:
- WGI has signed an agreement for the sale of WGI's chronically
underperforming assets in India - its 74% interest in Transworld
Garnet India (Pvt.) Limited ("TGI");
- WGI has concurrently signed a valuable distribution agreement with the
buyer of TGI that assures significant supply of high-quality product
that WGI can provide to the market;
- WGI intends to distribute US$0.80 per share, subject to successful
closing of the TGI transaction, expected in August.
In a June 16, 2008, news release, Passport acknowledged that these are
all "positive developments for WGI". Therefore, shareholders can legitimately
question the motivation for Passport's continued efforts to replace the Board
with its own nominees. Shareholders should consider:
- Passport controls only 13.1% of WGI's shares. It should not control
100% of the Board.
- Passport could gain control of the Company through a fair offer to
acquire the interest of other shareholders, but is offering those
shareholders no compensation.
- According to the dissident proxy circular, the dissident nominees
together and in total do not own a single share of WGI. Those
nominees' interests are aligned only with Passport, not with other
- WGI core business will continue to be the marketing and selling of
garnet while it pursues further growth opportunities in the waterjet
business. Passport supports the recent distribution agreement that
will strengthen the Company's position in its core business, but
illogically questions the existence of that core business.
- Passport has made no public statements describing how its strategy for
the waterjet business is different, in any meaningful way, than the
direction the Company has taken.
- Passport is critical of WGI's Board during the time of the most
significant decline in the share price, yet it is re-nominating two of
the Directors who served on the Board at that time.
It is clear that Passport supports the steps the Board has taken, and
that independent analysis demonstrates that the Company's compensation is in
line with its peers. The only remaining substantive issue raised by Passport
is about the time required to complete the sale of TGI.
Passport's comments about the TGI sale process expose a profound lack of
knowledge about the operations in India.
The current Board's goal was, consistently and correctly, to achieve the
highest value for the assets on behalf of shareholders. In 2004, the value of
those assets was seriously compromised. WGI's Indian holdings were under
severe attack from both government and competitive interests. The full extent
of these problems was not disclosed to the Board. Following Covell Brown's
appointment as Chairman in late 2004, and prior to the termination of the
then-CEO in April 2005, Mr. Brown discovered and advised the Board of the
seriousness of the issues in India. The Company's tangible assets, as well as
its rights at law, such as lease applications, mineral handling rights,
environmental permissions and a host of other regulatory and legal positions
were being rescinded, denied, stalled, or otherwise threatened. Government
interests were, de facto, seeking to seize WGI's holdings.
Those highly uncertain conditions precluded a value-maximizing sale at
Only after a series of victories in court and judgments by quasi-judicial
tribunals was the Company's position adequately established to allow for its
competitors to consider a purchase of WGI's assets as a superior option. This
position was attained only in early 2008, after considerable effort by the
Board and management. Effectively, prior to that point, the assets held almost
no value for buyers and any accelerated attempt to sell would have produced
little, if any, value for shareholders.
Company Investor Presentation Available
WGI has prepared a presentation for shareholders outlining the reasons to
vote for the Company nominees to the Board of Directors. The presentation can
be accessed at the Company website, www.wgiheavyminerals.com.
THE PROXY TO VOTE IS WHITE - HERE'S HOW
Time is short. To be counted at the Annual Meeting, your proxy must be
signed, dated and submitted as soon as possible and no later than 10:00 am
EDT, Monday June 23, 2008.
You may vote your common shares by internet, telephone, facsimile or
mail. We suggest voting today or no later than 24 hours prior to the deadline
to ensure your vote is received in a timely manner to be voted at the Meeting.
Mail is not recommended.
Please note that if you have mistakenly voted using the wrong proxy, you
have every right to change your vote by simply voting your WHITE proxy. This
action will cancel all previous votes since it is the later-dated proxy
received that will count at the meeting.
If you have any questions about the information contained in this
document or require assistance in completing your WHITE proxy form, please
contact our proxy solicitation agent at:
North American Toll Free Number: 1-866-676-3029
WGI Heavy Minerals, Inc. is a fully integrated miner, producer, and
marketer of industrial-grade minerals and replacement parts for ultra-high
waterjet cutting systems. The Company's shares are listed on the Toronto Stock
Exchange under the symbol WG.
Note: Permission to quote from Glass Lewis & Co. was neither sought nor
This press release contains forward-looking statements concerning the
business, operations, and financial performance and condition of WGI Heavy
Minerals, Incorporated. A number of the matters discussed and statements made
in the press release contain forward-looking statements reflecting current
expectations regarding future assets. When used in this press release, the
words "believe", "anticipate", "intend", "estimate", "expect", "project", and
similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such words. These
forward-looking statements are based on current expectations and are naturally
subject to risks, uncertainties, and changes in circumstances beyond
management's control that may cause actual results to differ materially from
those expressed or implied by such forward-looking statements. Factors that
may cause such differences include but are not limited to: exploration and
development risks; risks related to permits and title to property; risks
related to foreign countries and regulatory requirements; operating hazards;
foreign currency fluctuations; competition; fluctuations in the market price
of mineral commodities and transportation costs; uncertainty as to
calculations of mineral deposit estimates; uninsured risks; and dependence
upon key management personnel and executives. Actual results may differ
materially from those expressed here. You should not place undue reliance on
such forward-looking statements. The Company is under no obligation to update
or alter such forward-looking statements, whether as a result of new
information, future events, or otherwise.
For further information:
For further information: Ed Kok, Investor Relations, 810 East Sherman,
Coeur d'Alene, ID 83814 U.S.A., (208) 770-2208, Fax (208) 666-4000,
www.wgiheavyminerals.com, E-mail: email@example.com