Tuesday November 25, 2014

Court permits WIT group to get proxies

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The Court of Queen’s Bench has given the green light to the WIT Shareholders Group to solicit proxy votes, as the dissident group fights to keep the Weyburn Inland Terminal from being sold to a private grain company.
The Terminal’s current board of directors took the dissident group of shareholders to court to seek an order restraining them from asking for proxy votes.

The proxies are to be used in the vote on the offer by Canadian grain company Parrish & Heimbecker, which is seeking to buy all outstanding shares of WIT at the price of $17.25 a share, or the overall price of $94.6 million for all facilities owned and operated by WIT.

The vote is to take place on Friday, Feb. 28, at McKenna Hall, starting at 1 p.m. The offer has to be approved by fully two-thirds (or 66.67 per cent) of the shares which are represented in person or by proxy at the shareholders meeting.

Currently there are about 5.48 million common shares outstanding, with over 1,400 shareholders. Of these shares, the board and executive of WIT hold about 8.66 per cent of the shares, and these have been promised to be voted in favour of the sale.

WIT sent out a circular of information to all shareholders of record as of Feb. 5, and the dissident group of shareholders, called the WIT Shareholders Group, have also sent out a circular, asking for shareholders to commit their proxy votes. The WIT board took the group to court, but the court refused the request from WIT to prevent the group from soliciting proxies.

In spite of this, the WIT board was happy with the ruling handed down by the court.

“It’s what we were hoping for,” said Rob Davies, CEO for the Terminal. “Not all shareholders were being provided with the same information. We had the responsibility that all shareholders were to be provided with the same information.”

This was the basis for the circular that was sent out by WIT to all shareholders of record, said Davies.

“The judge ruled as we had hoped. The requirement of disclosure needed to be met. The judge ordered them to provide specific wording to the shareholders,” he added.

“At the meeting they had (on Feb. 4), they indicated they had a plan that they couldn’t share,” said Davies, noting the dissidents referred to “fixing” the trading market for shares, and the DRIP and CSPP, all of which are regulated by the Saskatchewan Securities Commission. DRIP refers to the Dividend Reinvestment Plan, which uses dividends from shares to be reinvested in WIT shares on behalf of the customer; CSPP is the Customer Share Purchase Plan, which utilizes deductions from grain cheques to buy shares in WIT, and there are no brokerage fees charged in either plan.

At the Feb. 4 meeting, legal representative Warren Sproule told the crowd the group, which included two former directors who had resigned from the board, had to be very careful about what they said, or else they might trigger a $4 million penalty payment to P&H, which is to be paid if there is a counter-offer to P&H’s bid to buy WIT.

“We could see no reason why a plan to fix any of those things would trigger the $4 million break fee. … The fee is not triggered by how existing plans are going to be fixed,” said Davies.

“There’s a lot of rules around how those plans work; there are forms you have to fill out. It’s a highly regulated environment; you can’t just fix it,” he added.

According to a statement from Michael Mainil of the WIT Shareholders Group about the court proceeding, “The dissident group acknowledged before the court that there were certain pieces of information which were missing from its information circular. The court ordered that the information circular be amended and that the dissidents’ solicitation could proceed on the basis of the amended circular.”

Mainil said in an interview they want shareholders to know there are other options available than to sell the entire company.

Questioning the need to sell the company in order to stay competitive, Mainil said, “If you look at the third quarter results, it’s profitable. If you look at the farm supply side of things, they’re profitable. The ethanol plant is not — but does that mean you sell all of it?”

He added that the current board of WIT has not been forthcoming with how the Terminal is doing financially, and said the directors need to involve all shareholders in an open discussion of all the facts.

“This is the right thing to do. Sure, legally they don’t have to, but morally they should have. Why would they not inform shareholders about what’s going on? They had plenty of time to involve the shareholders in an open discussion,” said Mainil.

After the court ruling, the Shareholders Group put together the circular that the judge ordered them to, and held a work bee on Friday to ensure all of the information was in the mail to shareholders the same day.

“They’re not engaging the shareholders. They wanted their agenda out there; they’re fighting the shareholders of their own company,” said Mainil of the court hearing.

“The board can make decisions to run the company; this was not just a decision to run the company, this was a decision to sell it,” he added.

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