Xi­men de­nies dal­ly­ing on dis­si­dent deben­tures

Xi­men Min­ing Corp. says that there is no rea­son for the courts to over­turn the re­sults of its an­nual gen­eral meet­ing. There was no de­lib­er­ate ef­fort to pre­vent a dis­si­dent group from vot­ing all of its shares, the com­pany claims.

Stockwatch Daily - - FRONT PAGE - By Mike Caswell

XI­MEN MIN­ING Corp., re­spond­ing to a court case brought by a dis­si­dent group, con­tends that there is no rea­son to over­turn the re­sults of its an­nual gen­eral meet­ing. The dis­si­dents did not put for­ward a dis­si­dent slate prior to the dead­line, ac­cord­ing to the com­pany. Xi­men also de­nies that it de­lib­er­ately de­layed con­vert­ing deben­tures that the dis­si­dents held.

The state­ments from Xi­men come in re­sponse to a pe­ti­tion brought in the Supreme Court of Bri­tish Columbia by a dis­si­dent group led by share­holder Robin Slaugh­ter. The dis­si­dents claimed that the com­pany un­fairly pre­vented them from vot­ing all of their shares at the meet­ing. It did so by de­lay­ing the con­ver­sion of con­vert­ible deben­tures the group held un­til the day af­ter the record date for the meet­ing, the pe­ti­tion claimed.

Xi­men does not deny that events oc­curred in that se­quence, but it says that this was not be­cause of any im­pro­pri­eties on the com­pany’s part. In a re­sponse filed on Oct. 23, 2017, the com­pany says that the tim­ing was in the hands of the dis­si­dent group. In the fall of 2016, long be­fore the dis­puted meet­ing, Xi­men had asked the group if they wanted to con­vert their deben­tures. The com­pany was look­ing to clear some debt, the re­sponse states.

The dis­si­dent group did not pro­vide no­tice un­til mid-De­cem­ber of their de­sire to con­vert, with the last no­tice com­ing on Dec. 21, 2016, Xi­men says. With the Christ­mas and New Year hol­i­days oc­cur­ring around that date, the con­ver­sion ar­range­ments did not go in un­til early Jan­uary, ac­cord­ing to Xi­men. The dis­si­dent group was aware of the tim­ing, and did not ob­ject, Xi­men says. Ac­cord­ingly, the com­pany pro­vided in­struc­tions to its trans­fer agent on Jan. 4, 2017 (the day af­ter the meet­ing record date).

As Xi­men sees things, the group sim­ply has no rea­son to com­plain. “At the time of ex­er­cis­ing their op­tion to con­vert un­der the Deben­tures, the Meet­ing and as­so­ci­ated record date had been pub­licly an­nounced. The Pe­ti­tion­ers were asked [whether] the shares could be is­sued in early Jan­uary. De­spite pre­sumed knowl­edge of the record date, they did not ob­ject or re­quest is­suance be­fore that date, nor did they ob­ject fol­low­ing the is­suance,” the re­sponse states.

The meet­ing, as de­scribed by Xi­men, was con­vened on Feb. 15, 2017, as sched­uled. It was only then that the dis­si­dents com­plained about their in­abil­ity to vote. Xi­men claims that this was the first the com­pany knew about the group’s con­cerns. As a re­sult, the com­pany ad­journed the meet­ing to March 10, 2017, to in­ves­ti­gate. The in­ves­ti­ga­tion, as de­scribed by Xi­men, de­ter­mined that the only prob­lem with the share is­suance was one that had noth­ing to do with the is­suance date. The shares had been in­cor­rectly is­sued with a four-month hold, an er­ror the com­pany reme­died.

Xi­men fur­ther points out that even if the dis­si­dent group had been able to vote, the re­sult would have been the same. This is be­cause the only board can­di­dates el­i­gi­ble for elec­tion at the AGM were the five man­age­ment nom­i­nees. Ac­cord­ing to the re­sponse, the com­pany re­ceived no no­tice of any other nom­i­nees on time.

In ad­di­tion, Xi­men says that it would be point­less for a court to over­turn the re­sults of its AGM. This is be­cause the com­pany’s next AGM is set for Dec. 6, 2017. The com­pany fur­ther says that most of the dis­si­dent group’s mem­bers have sold their shares. As such, it would not be ap­pro­pri­ate or prac­ti­cal to con­duct a vote based on the com­pany’s Jan. 4, 2017, share­hold­ings, Xi­men con­tends.

Xi­men’s ver­sion of events contrasts with that pro­vided by the dis­si­dents in their Sept. 20, 2017, pe­ti­tion. They said that they had at­tempted to con­vert $800,000 worth of deben­tures into 15.8 mil­lion shares, and that they gave no­tice of con­ver­sion with plenty of time to have it done prior to the record date. They claimed that the com­pany de­lib­er­ately de­layed the is­suance to pre­vent them from vot­ing. They also pointed out that sim­i­lar deben­tures is­sued to peo­ple sup­port­ing man­age­ment were con­verted in time.

At the meet­ing, the dis­si­dent group put for­ward a slate of di­rec­tors at the last minute. They also re­quested an ad­journ­ment to al­low them time to put to­gether a proxy. The mat­ter went to a vote and was de­feated nar­rowly. Had Mr. Slaugh­ter and his as­so­ciates been able to vote all of their shares, they would have been able to se­cure the ad­journ­ment, the pe­ti­tion claimed.

In ad­di­tion to Mr. Slaugh­ter, the pe­ti­tion­ers are Jonathan Ober­tas, Ja­son Ober­tas, Graeme Wy­man, Su­san Gabe, Ian Glen, Donna Wy­man, David Townsend and Robyn Wy­man. They are rep­re­sented by Van­cou­ver lawyer David Church of Church & Com­pany.

Van­cou­ver lawyer Daniel Bennett of Norton Rose Ful­bright Canada LLP rep­re­sents Xi­men. The stock closed Tues­day at four cents.

(XIM) Shares: 93,616,439

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