Board tweaks aren’t enough for unhappy shareholder
Detour Gold investor Paulson rejects settlement offer
DETOUR GOLD Corp. has responded to numerous shareholders who have encouraged a constructive dialogue and negotiated settlement with Paulson & Co. Chairman Alex Morrison has released the details of Detour Gold’s latest offer of settlement of Oct. 9 that was rejected this morning by Marcelo Kim of Paulson.
This settlement offer reflects the board of director’s continuing openness to change and willingness to reach a reasonable compromise that reflects the desires and interests of the company’s shareholders. Detour Gold reminds shareholders that it has already made sig-
nificant changes to its board with the addition of three new nominees and the resignation of two long-serving directors. Detour Gold understands from its significant shareholders that, while some further change may be welcomed, it is not nearly to the extent pursued by Mr. Kim. Without wholesale board change, Mr. Kim continues to demand his presence on the board. These demands are completely out of line with the feedback received from shareholders. As fiduciaries of the company and representatives of both shareholders and corporate interests, the board cannot possibly accept such a proposal.
The principal terms of the settlement offer are as follows:
• New nominees: In addition to the three new directors appointed in August (one of whom, Jim Gowans, was approached to be on the Paulson slate), one additional nominee of Paulson appointed immediately to the board. Based on ability to positively contribute, Detour expressed a preference for either Chris Robison or Dawn Whittaker from the Paulson slate but remained open to meeting additional candidates. Mr. Kim was not included in those preferred as Detour Gold does not believe his candidacy has the support of the company’s shareholders.
• Removal of legacy directors: As part of the company’s continuous board renewal efforts, in addition to the two legacy directors who were removed in August, one additional legacy director to leave the board for a total of three legacy directors leaving the company. Pro forma for these changes to the board, four of nine, or 44 per cent, of Detour directors will have turned over in the past six weeks.
• Nominee appointed to committees: Placement of the additional Paulson nominee on the corporate governance and nominating committee and the special committee.
• New chief executive officer: Michael Kenyon will step down as interim CEO by no later than the upcoming annual general meeting and the new Paulson nominee can begin work immediately with the corporate governance and nominating committee on an open global search for a new CEO.
• Sale of Detour Gold: While Detour Gold disagrees with Mr. Kim and Paulson on their central thesis — the sale of the company now — the Paulson nominee would immediately work with Detour Gold’s advisers and the special committee to understand the work that has been done in this area and the current state of play in this challenged mining merger and acquisition environment.
• Paulson presentation to the board: Access by Paulson directly to the board for presentations during a standstill period on any ideas for change they may have.
• Civil claim: Detour Gold would drop its tipping and market manipulation civil claim against Paulson.
• Non-disparagement and standstill: Paulson and Detour Gold would enter into an 18-month standstill and mutual non-disparagement.
“I am disappointed that this
latest very reasonable offer was rejected by Mr. Kim. Demanding a wholesale change of the board as a condition to negotiating a settlement is neither practical nor responsible. Given the critical stage we are at in executing the life-of-mine plan, now is not the time to throw the company into chaos and start from scratch, especially following the significant changes the board has already made. Such changes would limit the oversight the board could provide and put our operations at risk,” said Alex Morrison, chairman. “Our board has decided to keep our reasonable settlement offer open to Paulson. We ask our shareholders and other key stakeholders to assist us in achieving a satisfactory conclusion for all parties.”
The company has retained Kingsdale Advisors as its strategic shareholder and communications adviser BMO Capital Markets as its financial adviser, and McCarthy Tetrault LLP and Norton Rose Fulbright LLP as its legal advisers.
About Detour Gold Corp.
Detour Gold is an intermediate gold producer in Canada that holds a 100-per-cent interest in the Detour Lake mine, a long-life, large-scale, open-pit operation. Detour Gold’s shares trade on the Toronto Stock Exchange under the trading symbol DGC.
Lisa J Colnett, Edward Camp Jr Dowling, Robert Emmet Doyle, Andre Roger Falzon, Ingrid Jo-Ann Hibbard, John Michael Kenyon, Alexander G Morrison, Jonathan Arn Rubenstein
(DGC) Shares: 175,299,093