WGI Heavy Minerals Announces that Leading Proxy Advisory Firm
Recommends Shareholders Vote to Support Current Board
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 alarm."
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 shareholders. - 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 the time.
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:
<< Georgeson 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 obtained.
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: 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: firstname.lastname@example.org
CO: WGI Heavy Minerals, Incorporated ST: Idaho NI: MNG 2575 WNEWS DIV -0- Jun/17/2008 13:09 GMT