Well so much for that.
The battle for a new board and a new direction at Vancouver–based Taseko Mines Ltd. has ended with a whimper following the news that dissident, Chicago-based Raging River Capital has called off the fight that was scheduled to come to a head at a special shareholders meeting on Tuesday. The reason: inadequate shareholder support.
How inadequate? By last week’s cut-off date, and with more than 50 per cent of the votes in, Taseko reported, that on its yellow proxy form, that 94 per cent were voted against RRC’s proposals.
Details haven’t yet been published about the level of support for and against Raging River’s proposals – which required shareholders to complete a blue proxy form — but we know the overall support for the dissidents wasn’t high enough to reach the two-thirds support required to effect change at a special meeting.
(To be perfectly accurate there are two ways to effect change at a special meeting: to oust a director support is required from two-thirds of the votes cast at the meeting; to add directors support is needed from 50 per cent plus one of the votes cast. BC is the only province where these rules prevail. In other provinces, 50 per cent plus one is the hurdle that’s required to replace directors.)
But the word is that Raging River, the company’s second largest shareholder, will keep its powder dry for Taseko’s annual general meeting where 50 per cent plus one is the requirement. And it has a live lawsuit.
Taseko, which received the support of two institutional proxy advisory firms (Glass Lewis and ISS) in the lead-up to Tuesday’s meeting, received the benefit of a last minute switch when Vancouver-based Vertex One Asset Management (which owns a 4.55 per cent stake) opted to back management, saying it was “no longer” supportive of Raging River’s proposal. Vertex, which three months back agreed to support Raging River’s plan, changed its support because, on balance, it thought that current management, could do a better job.
Between now and the time of the annual meeting, all parties will be watching the progress Taseko, whose outlook is geared to the price of copper, has made on dealing with the issues raised by Raging River and others. In the time of the proxy battle, Taseko has made some major corporate governance changes, including committing to add two new independent directors, giving shareholders a vote on the Hunter Dickinson Inc. relationship (HDI provides management and administrative services to several publicly-traded companies including Taseko); as well as any future HDI transactions needing shareholder approval.
Given that Taseko has found religion it has to act accordingly. Without Raging River focusing of those matters, the chances are that Taseko wouldn’t have made the changes.
Meantime, Taseko’s shareholders will be left holding the $4.5 million cost of defending itself, of fighting a lawsuit from Raging River and from dealing with regulatory matters. The only consolation is that the share price is higher now than it was in mid-January when Raging River, which had acquired a five per cent stake, launched the proxy battle. Then Raging River cited the conflict faced by Taseko’s directors who were affiliated with HDI, the company’s share price underperformance and the quality of its board nominees.
The battle became ugly very quickly: Raging River, filed its circular early (two months before the meeting), made allegations about insider trading while Taseko pressed the view that Raging River had a conflict because in addition to being a shareholder, it also owned debentures, a conflict made worse because it and not Raging River made the disclosure. Taseko has pursued that conflict and last week, announced a U.S. Court had ruled Raging River must make a filing “to fully disclose their purpose for acquiring Taseko’s senior notes.”