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
- 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
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:
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
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
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
NI: MNG 2575 WNEWS DIV
-0- Jun/17/2008 13:09 GMT
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