Stillwater Sends Letter to Shareholders Highlighting Strong Track Record,
Proven Operational Plan and Positive Momentum
Cites Clinton Group Has No Plan for Operating Stillwater and Led a
Questionable Nominee Vetting Process
Urges Shareholders to Vote FOR Stillwater’s Eight Highly-Qualified Incumbent
BILLINGS, Montana -- April 17, 2013
Stillwater Mining Company (NYSE:SWC) (TSX:SWC.U) (“Stillwater” or the
“Company”) today announced that its Board of Directors has sent a letter to
shareholders in connection with the Company's 2013 Annual Shareholders
Meeting, which will be held on May 2, 2013.
The letter states how ongoing investment in Montana and the Company's growth
projects against a positive outlook for palladium pricing has positioned
Stillwater to generate superior value for shareholders over the long-term.
Stillwater’s strength is a result of the planning, disciplined execution and
flexibility of a decade long strategy put in place by the Board and management
to properly manage and grow its complex mining operation.
“We are excited about our prospects in Montana and elsewhere given our
existing operations and expansion projects as well as favorable long-term
pricing trends,” commented Frank McAllister, Stillwater’s Chairman and Chief
Executive Officer. “Careful financial planning has given us the security and
flexibility required to weather the unpredictable nature of commodity markets,
while remaining fully committed to, and capable of, growing PGM production in
Montana. Price movement in commodities just this week illustrates how
Stillwater’s current Board and management team, with their industry experience
and financial expertise, are far more qualified to run Stillwater than the
Clinton Group or its poorly vetted director nominees.”
Added McAllister, “The Clinton Group, for its own purposes, has misled
Stillwater investors by disregarding the strong correlation our share price
has had to the palladium price, tries to rewrite history of the Company's
strategic relationships and dismisses asset validation through third party
investment. They present no true plan to operate the Company, offer
value-destructive ideas and seek to elect director nominees that have
misrepresented their accomplishments. We urge shareholders to focus on the
facts and vote the white proxy for all of Stillwater’s nominees.”
All shareholders of record as of March 6, 2013 are entitled to vote at the
2013 Annual Shareholders Meeting. Stillwater encourages all shareholders to
carefully review its definitive proxy filing and other materials and vote only
their WHITE proxy card. For more information about Stillwater’s 2013 Annual
Shareholders Meeting, please visit www.supportstillwater.com.
The full text of the letter follows:
April 17, 2013
Dear Fellow Shareholder:
STILLWATER IS THE STRONGEST IT HAS EVER BEEN
DON’T LET THE CLINTON GROUP PUT YOUR INVESTMENT AT RISK
Stillwater is at an important point in the Company’s history. Over the years
we have transformed Stillwater into a low cost, high volume palladium
producer. We now have a viable platform to promote growth while carefully
managing PGM price volatility. As evidenced by recent market conditions,
Stillwater remains very well-positioned given our capital reserves, proper
planning and flexibility on growth – all signs of proper stewardship and
management. Over time, palladium’s continued appreciation versus platinum – a
re-rating that Stillwater’s marketing efforts helped drive – will allow us to
leverage our expansion projects and generate significant value for
Stillwater’s share price has, and continues to be, highly correlated to the
palladium cycle. Indeed, since 2003 Stillwater’s share price has increased
450% while the price of palladium has increased 427%. This result was not by
luck. The Company struggled tremendously when faced with the palladium pricing
trough of 2003 because it had no clear operating plan or strategy – an issue
the Board and management had been tackling since 2001 after inheriting
substantial planning, operating and cost challenges from prior management. The
correlation reflects the significant accomplishments of the Company over the
Furthermore, even as we invest in our business and develop both new and
existing projects, Stillwater has an exceptional record of cost management. We
have managed costs better than our PGM peers and other North American hard
rock miners. We have also maintained a consistent level of G&A in our core
business while implementing an even more rigorous safety program and building
a workforce and infrastructure to support our growth initiatives in Montana.
Your Board of Directors has a deliberate and detailed plan to create value for
shareholders, hinging directly on Stillwater’s unrelenting focus on growing
its Montana operations. 87% of the Company’s 2013 $173 million capital budget
will be spent on growing its PGM operations in Montana. Stillwater remains
staunchly committed to Montana as the cornerstone of the Company’s strategic
plan and the engine for future growth and value creation.
THE CLINTON GROUP HAS NO VIABLE PLAN FOR STILLWATER
As we have stated, we value the opinions of our investors and welcome feedback
on a variety of topics. However, we believe that the Clinton Group, a hedge
fund that only recently acquired just 1.3% of the Company’s outstanding
shares, has launched a self-serving attack on Stillwater and has presented no
plan, no suitable slate of nominees and no qualified CEO – a very dangerous
combination for shareholders that creates tremendous risk.
The Clinton Group has merely disclosed a disjointed set of “ideas” for
Stillwater to willingly adopt which collectively do not represent a coherent
alternative strategy to the one your management and Board are pursuing. In our
own analysis, many of these ideas will be value-destructive for Stillwater’s
For example, the Clinton Group has proposed:
*Imposing pricing collars, which would decrease investors’ commodity
exposure and take away the full PGM price upside
*Immediately tendering for the convertible debt, which would be expensive
and leave Stillwater poorly capitalized in the midst of its Montana growth
*Immediately issuing dividends or repurchasing shares, which would preclude
Stillwater from making investments in PGM growth without increasing
*Converting Stillwater to an MLP, which would be an unattractive option
given the volatility and capital requirements of our business – not to
mention the complete lack of precedent precious metal MLPs
*Proceeding immediately with eight different Montana growth projects, many
of which are not yet permitted and certainly do not have completed
engineering. This type of undisciplined approach:
*Ignores the lack of available and experienced manpower needed
*Ignores mine logistics and planning
*Ignores the quality of ore reserves
*Ignores the fact that some projects require years of permitting after
careful work with our neighbors and regulators
*Shows that the Clinton team has no appreciation for the complex
engineering requirements of mine development
The Clinton Group also chooses to obscure the fact that Stillwater remains
extremely well-capitalized to fund our PGM operations and future growth, while
other precious metal companies are struggling and are beset with write-offs
and financing constraints. Indeed, the convertible debt funding we executed in
October 2012 was a critical piece of our PGM growth strategy and enabled us to
remain flexible in the face of commodity price volatility. The Clinton Group
would have you believe that it was a bet against the future performance of the
Company. To the contrary, it was a prudent and disciplined financing decision
– far more advantageous than taking on high-yield debt with restrictive
covenants – and it provides Stillwater a low-coupon piece of paper, the
principal of which can ultimately be repaid in cash, negating any potential
The Clinton Group also fabricated an entire history in regards to Stillwater’s
relationship with MMC Norilsk Nickel, claiming that Norilsk had operating
control over the Company. In contrast, Stillwater and Norilsk collaborated in
an effective and brilliant marketing arrangement that ensured palladium’s
continued and increasing use in the U.S. automobile industry. Norilsk had no
control over the operations or budget of the Company other than appointing
Directors – fully independent of Norilsk, and two of whom are still with
Stillwater today – to constitute a majority of the Board.
CLINTON HAS NOT IDENTIFIED A SUITABLE CANDIDATE FOR CEO
The Clinton Group also indicated in recent materials that they would have
former Stillwater CEO and current director nominee of the Clinton Group,
Charles Engles, serve as the interim replacement CEO of Stillwater.
The Clinton Group mischaracterizes Dr. Engles’s tenure as Stillwater CEO,
saying he adopted a growth strategy that continues today.
*Stillwater struggled under Dr. Engles’s leadership with no clear strategy
*Dr. Engles left abruptly after only two and a half years with no clear
explanation to Stillwater shareholders
While Clinton has referenced unnamed sources that are supportive of Dr.
Engles’s tenure at the Company, this uncorroborated hearsay is insufficient in
validating his murky record as CEO. Stillwater shareholders deserve an
immediate, transparent and forthright explanation by Dr. Engles himself and
the Clinton Group regarding Dr. Engles’s abrupt resignation from Stillwater in
1997. It is critical that Stillwater shareholders are made aware of all of the
details surrounding his departure, given the Clinton Group’s misrepresentation
of his record and shortsighted nomination of Dr. Engles as a CEO candidate of
Stillwater in the event Clinton is successful in its takeover of the Company.
Our shareholders deserve to know the full history before being asked to vote
for bringing back an ex-CEO.
CLINTON PUT FORTH AN UNQUALIFIED BOARD SLATE WITHOUT PROPER VETTING
The Clinton Group has put forth a slate of unqualified director nominees, who
are not fit to oversee any U.S. public company, much less a complex PGM miner
such as Stillwater. Furthermore, Clinton has failed to properly vet its
candidates, as is evident in their collective dearth of qualifications and
experience and, in some cases, severe lack of judgment. The Clinton Group
removed John DeMichiei after Stillwater pointed out serious misstatements in
his academic credentials; the fact that Clinton did not discover and correct
this earlier suggests that they did not perform even the most basic due
diligence on their nominees. Shareholders should not compromise for an
unqualified slate of directors without proper vetting or due diligence.
Stillwater prides itself on its strong core values, including the fair and
just treatment of its employees and unions, and the Company will not stand by
while Clinton attempts to sully Stillwater’s exemplary track record with a
proposed slate of unqualified dissident director nominees.
To highlight a few of Clinton’s director nominees’ most acute deficiencies:
*John DeMichiei – After Stillwater called attention to inconsistencies in
Mr. DeMichiei’s academic record and poor safety and labor relations at
Signal Peak Energy, Clinton pulled Mr. DeMichiei from its slate of
director nominees mid-solicitation.
*Charles R. Engles – As noted above, Clinton mischaracterizes Dr. Engles’s
record as CEO of Stillwater and fails to address our request for
disclosure of the details about his abrupt resignation from the Company.
Dr. Engles oversaw Stillwater when it was a drastically different company
than it is today and he struggled mightily; there is no evidence that he
has the skills or experience to successfully run Stillwater now or in the
*Seth E. Gardner – Mr. Gardner’s only public company experience consists of
nine weeks on Scottish Re Group’s board before it was delisted from the
NYSE. Despite Clinton’s assertions, he has no substantive public company
*Michael “Mick” McMullen – Contrary to Clinton’s claims that Mr. McMullen
understands the operations and financials of nearly every PGM company, he
has no record of PGM experience. The mining companies he has worked with
are not PGM miners; the businesses differ drastically and his experience
is simply not relevant to Stillwater.
*Michael McNamara – Mr. McNamara has no public company board or management
experience. He is a financial analyst at a small financial advisory
boutique with only 10 years of work experience, making him an unsuitable
candidate to serve on Stillwater’s Board.
*Brian Schweitzer – Mr. Schweitzer was a staunch supporter of Stillwater
while he was in office, and only weeks later he inexplicably changed his
stance and has chosen to support the Clinton Group. Mr. Schweitzer has no
public company board or management experience and limited management
experience outside of politics.
*Patrice Merrin – Despite Clinton’s assertions, Ms. Merrin also has no U.S.
public company board experience; her tenure on the Council on
Canadian-American Relations is irrelevant and does not count. Furthermore,
her ban from the U.S. for involvement with a company that worked with the
Cuban government is notable and should not be taken lightly.
*Gregory P. Taxin – Mr. Taxin has a questionable investment history in
mining companies and no history whatsoever investing in PGM companies. He
and the Clinton Group have significantly underperformed for public company
INDEPENDENT THIRD PARTY STAKEHOLDERS BELIEVE IN STILLWATER’S CURRENT
It is important for shareholders to note that Stillwater’s Board and
management team are not alone in favoring the Company’s strategy and nominees.
Several independent parties, who have a comprehensive knowledge of Stillwater
and are impacted by the Company’s operations, agree with Stillwater, support
our incumbent director nominees and have expressed concern over Clinton’s
campaign. Speaking with the Stillwater County News last month, U.S.
Congressman of Montana, Steve Daines, called Stillwater “a world-class
business” with a strong presence in Montana.
Likewise, in a letter to shareholders dated April 7, 2013, the United
Steelworkers, the Union that represents many of Stillwater’s employees has
expressed opposition to the Clinton Group’s attempt to replace Stillwater’s
Board of Directors and CEO, stating:
“There is no question about what is best for the success of the Stillwater
Mining Company and the USW’s membership in this upcoming proxy fight. CEO
Frank McAllister and the existing Board of Directors have done a good job
running the Company, and the Clinton Group’s attempt to replace them is
The Good Neighbor Agreement (GNA) Councils have also sent a letter to
Stillwater shareholders, dated April 2, 2013, encouraging them to vote in
support of Stillwater’s plan, saying:
“The Councils appreciate and respect the commitment shown by the current
leadership of SMC over the last twelve years to implement and promote the GNA.
The Councils encourage shareholders of SMC to vote in support of the current
Board and management.”
YOUR INCUMBENT DIRECTOR NOMINEES ARE EXPERIENCED, HIGHLY QUALIFIED AND
DEDICATED TO ALL SHAREHOLDERS
The Company’s incumbent director nominees are far superior to Clinton’s
nominees, who do not have the necessary skills and industry experience to run
a complex PGM miner such as Stillwater. ALL of Stillwater’s nominees have U.S.
public company board experience. ALL of Stillwater’s nominees have direct
experience with PGM mining. Your current Board is also a positive balance of
tenured Stillwater directors who have helped guide the turnaround of the
business as well as recently added directors who bring a fresh perspective to
As we look to the future, it is crucial that Stillwater be under the
stewardship of the right directors to leverage the positive momentum generated
in recent years. Stillwater’s nominees are committed to the development of the
Company’s PGM operations and growth programs and creating value for ALL
KEEP STILLWATER GOING STRONG – VOTE FOR THE STILLWATER NOMINEES
ON THE WHITE PROXY CARD TODAY
Stillwater is stronger than ever. To ensure that the Clinton Group does not
disrupt your company’s progress, please use your WHITE proxy card to vote
TODAY—by telephone, over the Internet, or by signing, dating and returning the
WHITE proxy card in the postage-paid envelope provided. You are urged to
discard any green proxy card sent to you by Clinton Group. Even a protest vote
against Clinton Group’s nominees on Clinton Group’s green proxy card will
cancel any previous proxy submitted by you in favor of Stillwater. Please vote
only the WHITE proxy card.
As always, we appreciate all the active engagement on the part of our
shareholders, and thank you for your support.
Francis R. McAllister
Chairman and Chief Executive Officer
Your Vote Is Important, No Matter How Many Or How Few Shares You Own
If you would like to obtain copies of the Company’s proxy materials or have
questions about how to vote your shares, or need additional assistance, please
contact the firm assisting us in the solicitation of proxies:
INNISFREE M&A INCORPORATED
Shareholders Call Toll-Free: (877) 825-8906
Banks and Brokers Call Collect: (212) 750-5833
We urge you NOT to vote using any green proxy card sent to you by
the Clinton Group, as doing so will revoke your vote on the WHITE proxy card.
About Stillwater Mining Company
Stillwater Mining Company is the only U.S. producer of palladium and platinum
and is the largest primary producer of platinum group metals outside of South
Africa and the Russian Federation. The Company’s shares are traded on the New
York Stock Exchange under the symbol SWC and on the Toronto Stock Exchange
under the symbol SWC.U. Information on Stillwater Mining Company can be found
at its website: www.stillwatermining.com.
Some statements contained in this news release are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and,
therefore, involve uncertainties or risks that could cause actual results to
differ materially. These statements may contain words such as "believes,"
"anticipates," "plans," "expects," "intends," “projects”, "estimates,"
"forecast," "guidance," or similar expressions. These statements are not
guarantees of the Company's future performance and are subject to risks,
uncertainties and other important factors that could cause our actual
performance or achievements to differ materially from those expressed or
implied by these forward-looking statements. Such statements include, but are
not limited to, comments regarding expansion plans, costs, grade, production
and recovery rates, permitting, financing needs, the terms of future credit
facilities and capital expenditures, increases in processing capacity, cost
reduction measures, safety, timing for engineering studies, and environmental
permitting and compliance, litigation, labor matters and the palladium and
platinum market. Additional information regarding factors, which could cause
results to differ materially from management's expectations, is found in the
section entitled "Risk Factors" in the Company's 2012 Annual Report on Form
10-K and in subsequent filings with the United States Securities & Exchange
Commission. The Company intends that the forward-looking statements contained
herein be subject to the above-mentioned statutory safe harbors. Investors are
cautioned not to rely on forward-looking statements. The Company disclaims any
obligation to update forward-looking statements.
Innisfree M&A Incorporated
Arthur Crozier / Jennifer Shotwell / Scott Winter
Sard Verbinnen & Co
Dan Gagnier / Michael Henson
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