TORONTO – Sherritt International Corp. (TSX:S) is facing criticism from a new source — Takota Asset Management Inc., a private investment firm that counts the mining company among its largest holdings.
Takota said Wednesday that it will vote in favour of three directors proposed by a group of dissident shareholders led by Halifax-based activist investment firm Clarke Inc. (TSX:CKI) and withhold its votes for three of the Sherritt nominees — Peter Gillin, Edythe Marcoux, and Bernard Michel.
Toronto-based Takota says it’s not part of the initiative led by Clarke chief executive George Armoyan, who is one of the dissident group’s nominees, but says it’s also dissatisfied with how Sherritt has performed recently.
“As long-term investors, we are prepared to be patient and, indeed, we have been patient. But we are forced to recognize that the current (Sherritt) board and leadership of Sherritt is lacking the focus, determination and energy the company was demonstrating 10 years ago,” Takota said in its statement.
“Those qualities need to be reintroduced into the company. Sherritt has an urgent need for dynamic entrepreneurs focused on costs, production, and shareholder value.”
Takota hasn’t disclosed the size of its Sherritt holding and its principal partner, Scott Leckie, said in an interview that it’s the firm is private and not obliged to do so under Canadian rules. However, Leckie said Sherritt is Takota’s largest holding. The firm also said in its announcement that Takota acquired its stake in Sherritt in 2009.
Generally, shareholders must disclose once their stake rises above 10 per cent of a publicly traded company’s shares. Shareholders with at least five per cent of a company’s total shares outstanding can requisition a special meeting for a vote, although the incumbent board and management have some leeway about when it will be held.
The group led by Armoyan, in addition to seeking three seats on the Sherritt board, wants to amend the company’s bylaws to require unanimous board support for any major acquisition. It has also taken aim at how both Sherritt directors and executives are paid, as well as some additional perks it says they receive.
For its part, Sherritt has been critical of the proposals and suggested that they would weaken the company’s governance by giving any one director effective veto power because of the requirement for board unanimity on major deals.
Clarke’s initial request for a shareholder meeting was sent to Sherritt in mid-December, just days before it announced the planned sale of its coal business in Western Canada to two buyers. Colorado-based Westmoreland Coal Co. agreed to buy Sherritt’s Prairie and Mountain operations in Western Canada for $465 million and Altius Minerals of St. John’s, N.L., (TSX:ALS) agreed to buy Sherritt’s entire coal royalty portfolio and coal developments for $481 million.