Taseko proxy fight picks up steam
It won’t take as long as t he U. S. presidential election, but the battle for the hearts and minds of shareholders of Taseko Mines Ltd., underway for two months, has two months to run before the final showdown on May 10.
And halfway through, Chicago- based shareholder Raging River Capital — which is leading the charge to have its four director nominees elected, all part of a plan to change Taseko’s direction — argues its campaign is having an effect.
In an interview Friday, Mark Radzik, managing partner of Raging River, said “you know that you have hit the right spot when you get a violent reaction.
“And we are seeing that,” added Radzik when referring to the volley of releases, some corporate governance changes and amendments to some corporate policies made by Taseko, a company that represents Raging River’s entry into Canadian proxy battles.
Radzik argues the Taseko response is part of its plan “to distract from the real issues” which he argues are poor share- price performance (over the past five years the shares have declined by almost 90 per cent); and corporate governance.
“Underperformance is usually the symptom, not the cause,” said Radzik. “I would posit that the cause is insider deals and conflicted directors.”
Earlier he said “making preferential, related- party deals in a difficult macro cycle further destroys shareholder value.” By his calculations, over the past three years Taseko has spent $ 28 million in “investments to related companies and fees.”
Radzik was referring to the role played in Taseko by Hunter Dickinson (a private company that has “acquired, advanced and developed mineral properties,” for 30 years and which employs some Taseko executives) and the company’s late 2014 purchase of Curis Resources. Radzik claimed Friday the purchase of that “near-bankrupt company, with a technology that’s not tested,” was “ridiculous.”
In fact, if Radzik wins the proxy battle it’s not inconceivable he might offer the Curis mine back to the executives who organized the purchase — provided they pay the $ 100- million valuation. “It’s a tough situation, the more they argue it’s not worth $100 million, the more they indict themselves.”
His firm, which has a 5.1-per-cent equity stake and a 7.95- per cent interest in a Taseko bond issue — both bought late last year — added shareholders, including a number of long-suffering retail investors, who have also reached out.
One institutional manager, Vertex One Asset Management which has a 3.1- perstake, said it “would be supportive of Raging River’s plan to focus Taseko’s business strategy, evaluate the relationship with Hunter Dickinson and address Taseko’s balance sheet.”
So assuming that Raging River, which said “it’s a shareholder first,” and which has written to Taseko advising against shareholder dilution and has offered to backstop a rights offering, wins, what would Taseko look like in a few years? Radzik said it’s a matter of “getting the right strategy focusing on the core operating assets, and re- engaging with the First Nations so that we build trust.”
Taseko said Friday that as a major bondholder, Raging River has a conflict. “Raging River’s nominees could be incentivized to accelerate repayment of Taseko’s debt by liquidating Taseko’s assets, even at the bottom of the market.”
Taseko added it “benefits from Hunter Dickinson’s quality and cost-effective services. Taseko’s disclosure is transparent and the relationship follows proper governance. There is no conflict.”