The current directors of New Millennium Iron Corp. could keep their jobs after they narrowly fended off a dissident shareholder group in a proxy fight.
The existing board was backed by 58.23 percent of shareholder votes cast at a special meeting in Toronto on Tuesday morning, as the dissidents received 41.77 percent, based on a preliminary count. The dissidents, who want New Millennium to slash spending, tried to remove six from the company’s nine directors and replace all of them with four new nominees.
The key question entering the meeting was are you going to Tata Steel Ltd., the Indian steel giant, would support. Tata owns 22.6 per cent of New Millennium shares, and its vote was going to determine the winner. New Millennium was confident Tata would back management, and it ultimately did.
If Tata’s vote is stripped out, the dissidents got significantly more votes than the current board.
Related
- New Millennium Iron Corp shareholders demand drastic changes to directors, expensesNew Millennium’s buyback raises questions
-
-
-
“(Tata’s decision) is fairly disappointing considering the degree of support we had from the minority shareholders,” Susan Milton, the best choice from the dissident group, said in an interview.
Robert Patzelt, New Millennium’s leader, said he was disappointed the dispute wasn’t settled prior to the vote.
“We have to return to business now as soon as practicable,” he explained. “We must double up our efforts because we’ve lost some time to momentum.”
The dispute revolved around the company’s central strategy. Montreal-based New Millennium owns vast iron deposits in Canada’s Labrador Trough, but its ambitious intends to develop them were thwarted by plunging global iron ore prices.
The dissidents, led by Milton and her family, want the company to slash spending whenever possible before the iron market recovers. They are particularly unhappy about compensation to board and management, which they think is way excessive for a struggling junior mining company. Patzelt received total compensation of $469,759 last year, based on a proxy circular, while at least five other executives received more than $250,000.
Patzelt and his team want to keep moving forward having a slimmed down iron project within the Labrador Trough called NuTac. They believe that halting work would damage relations with stakeholders and disrupt all of the momentum the company has generated.
“Unless you believe that iron ore is coming back in two years, (New Millennium’s) strategy doesn’t make sense at all,” Milton argued. Her family owns about seven percent from the stock.
Patzelt said the company’s plan is “flexible” and “measured” and the man welcomed more feedback on it from shareholders.
Paul Davis, an attorney at McMillan LLP who advised the Milton family, said the lines of communication will “continually be open” between the two sides.
Proxy advisory firms Institutional Shareholder Services and Glass Lewis & Co. both recommended that New Millennium’s shareholders elect a brand new board with a mix of nominees in the company and the dissidents. Patzelt said he disagreed using the advisory firms on some tips, but noted they helped shareholders get a better knowledge of the dispute.
Iron ore, which peaked at a lot more than US$190 a tonne in 2011, has become worth about US$57. The worldwide marketplace is heavily oversupplied because of soaring production from Australia and Brazil and weakening demand in China.
The changing market conditions have crushed New Millennium’s stock price, which is down a lot more than 97 percent from the 2011 peak.
pkoven@nationalpost.com
Twitter.com/peterkoven
