De­tour Gold dis­si­dent Paul­son poses ques­tions for firm

Stockwatch Daily - - FRONT PAGE - An anony­mous di­rec­tor of Paul­son re­ports

PAUL­SON & Co. Inc., one of the largest, long-term share­hold­ers in De­tour Gold Corp., has re­leased a list of ques­tions it be­lieves the com­pany should ad­dress in the cir­cu­lar it files for the up­com­ing spe­cial meet­ing. To­day is the record date for the meet­ing. Th­ese ques­tions are in­tended to en­sure the com­pany is

trans­par­ent in pro­vid­ing share­hold­ers with in­for­ma­tion fun­da­men­tal to eval­u­at­ing the re­spon­si­bil­ity of the board for De­tour Gold’s failed per­for­mance. Since req­ui­si­tion­ing the meet­ing, Paul­son has con­tin­u­ously tried to en­gage with the com­pany on set­ting fair pro­ce­dures for the Dec. 11 spe­cial meet­ing and re­leas­ing im­por­tant in­for­ma­tion for share­hold­ers to con­sider be­fore they vote for di­rec­tors. Con­trary to good gov­er­nance prin­ci­ples and their duty to share­hold­ers, the com­pany and its ad­vis­ers have not sub­stan­tively re­sponded to any of those re­quests. Given the com­pany’s si­lence, and as the record date is now here, Paul­son has no choice but to pub­licly raise th­ese ques­tions and de­mand that the com­pany ad­dress the fol­low­ing ques­tions in its proxy cir­cu­lar:

• Paul­son com­mits that, if there is a set­tle­ment to this proxy con­test, all terms of any set­tle­ment in­clud­ing all cor­po­rate gov­er­nance ar­range­ments will be pub­licly re­leased to share­hold­ers. Will t he com­pany sim­i­larly com­mit? If not, why not?

• Does the board ac­cept that it is re­spon­si­ble for the com­pany’s poor per­for­mance? Since Paul­son launched the cam­paign to re­place the board, the com­pany has changed some di­rec­tors but has left a core group of di­rec­tors who have held lead­er­ship roles for nearly 10 years in place, and who had pri­mary re­spon­si­bil­ity for over­sight of the de­vel­op­ment and ex­e­cu­tion of the com­pany’s

life-of-mine plans. Does the com­pany not ac­cept that the core group, in­clud­ing the chair, Alex Mor­ri­son, and the in­terim chief ex­ec­u­tive of­fi­cer, Michael Kenyon, are re­spon­si­ble for the de­struc­tion of share­holder value?

• Why does the com­pany refuse to ad­here to best prac­tices for dis­clo­sure of ma­te­rial in­for­ma­tion? This year alone, the com­pany-re­leased re­vi­sions to the prior life-of-mine (LOM) plan days be­fore the an­nual gen­eral meet­ing vot­ing dead­line, never filed a Na­tional In­stru­ment 43-101 tech­ni­cal re­port de­spite fil­ing a ma­te­rial change re­port, se­lec­tively dis­closed in­for­ma­tion to one share­holder about its deal­ings with an­other gold com­pany and re­fused to pro­vide any in­for­ma­tion on in­terim CEO Mr. Kenyon’s em­ploy­ment agree­ment and sev­er­ance terms.

• Paul­son and other share­hold­ers have long sus­pected that the dis­clo­sure of the 2018 LOM plan was de­lib­er­ately de­layed un­til af­ter the dead­line share­hold­ers had for vot­ing at this year’s AGM. This ap­pears to be sup­ported by a dis­turb­ing al­le­ga­tion made by a whis­tle blower to the On­tario Se­cu­ri­ties Com­mis­sion, and copied to Paul­son, to the com­pany and to an­other share­holder that has pub­licly crit­i­cized the board. This com­plaint, if only par­tially true, con­firms that there are com­pelling rea­sons to doubt that the com­pany’s board has ex­er­cised its fidu­ciary du­ties to share­hold­ers. Among the al­le­ga­tions (which have not been proven), the whis­tle blower in­di­cates that the new LOM plan was made known to man­age­ment as early as Fe­bru­ary, with the com­pany wait­ing un­til April 27 to dis­close it. The com­plaint also al­leges an in­sider traded with this ma­te­rial non-pub­lic in­for­ma­tion in March. Why did the com­pany wait un­til April 27 to re­lease the 2018 LOM plan de­tails de­spite man ag e me n t hav in g this in­for­ma­tion well be­fore that? Will the com­pany re­spond to the al­le­ga­tions and in­form share­hold­ers of the find­ings of any in­ves­ti­ga­tion it con­ducts?

• Did com­pany in­sid­ers de­liver no­tices of the in­ten­tion to ex­er­cise op­tions due to ex­pire on June 20 be­fore June 20 when the stock was trad­ing be­low the strike price? If not, what was the com­pany’s ba­sis for main­tain­ing that the op­tions did not ex­pire on June 20?

• Paul­son com­mits not to en­gage in vote buy­ing and, for months, has asked the com­pany in nu­mer­ous pri­vate let­ters to do the same. Now Paul­son is ask­ing the ques­tion pub­licly: will the com­pany com­mit like­wise, given their own proxy solic­i­tor’s pub­lic rec­om­men­da­tion that such prac­tice be banned in proxy con­tests. If not, why not?

• Paul­son has sent the com­pany a draft form of proxy weeks in ad­vance of the record date in an ef­fort to en­sure that the com­pany acts fairly in re­view­ing all share­hold­ers’ votes. Will the com­pany agree to a sin­gle, straight­for­ward “uni­ver­sal” proxy card for the meet­ing? If not, why not?

• Why has the board hired two teams of le­gal ad­vis­ers from dif­fer­ent firms and what are their re­spec­tive roles? Why did the board en­gage an in­vest­ment bank on this mat­ter if it is not in­ter­ested in ac­tively con­sid­er­ing strate­gic al­ter­na­tives?

• What have been the com­pany’s to­tal costs of en­gag­ing two law firms, one in­vest­ment bank and proxy ad­vis­ers in the board’s fight against its own share­hold­ers?

• Why is the com­pany con­tin­u­ing ma­li­cious and false lit­i­ga­tion against Paul­son that will ul­ti­mately be dis­missed? How is this ex­pense a good use of De­tour Gold’s cor­po­rate re­sources?

At­tempts to deprive share­hold­ers of their most fun­da­men­tal right to vote for di­rec­tors with full in­for­ma­tion only proves that the board is more in­ter­ested in en­trench­ing it­self than ful­fill­ing their du­ties to the com­pany and act­ing for the ben­e­fit of share­hold­ers. Share­hold­ers are en­cour­aged to de­mand that the com­pany an­swer th­ese and other im­por­tant ques­tions in its cir­cu­lar, which should be filed im­mi­nently.

The com­pany will soon is­sue its cir­cu­lar and proxy. Share­hold­ers should re­view the cir­cu­lar with a crit­i­cal eye and as­sess whether the com­pany has ad­dressed th­ese im­por­tant ques­tions. If the com­pany does not, then share­hold­ers should de­stroy the com­pany’s proxy form. Real change will only come about through a whole­sale re­place­ment of the board. Paul­son will soon file its own ma­te­ri­als and proxy, and share­hold­ers will fi­nally have a chance to vote for real change and for its slate of new, highly qual­i­fied di­rec­tors.

About Paul­son & Co. Inc. Paul­son is one of De­tour

Gold’s largest in­vestors, ex­er­cis­ing con­trol or di­rec­tion over ap­prox­i­mately 5.4 per cent of De­tour Gold’s shares. Hav­ing first in­vested in the com­pany nine years ago, Paul­son pre­vi­ously pro­vided $280-mil­lion (Cana­dian) in di­rect eq­uity and $250-mil­lion (U.S.) in con­vert­ible notes to fi­nance its mine com­ple­tion. Paul­son, along with sev­eral other ma­jor share­hold­ers in the com­pany, has grown in­creas­ingly frus­trated by the com­pany’s in­abil­ity to ap­pro­pri­ately man­age share­hold­ers’ as­sets, hav­ing de­stroyed bil­lions of dol­lars of value in the process. Paul­son, founded in 1994, is an in­vest­ment man­age­ment firm with of­fices lo­cated in New York, Lon­don and Dublin.

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: 175,304,093

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.