Billionaire Paulson Accuses Detour Gold of ‘Bullying Tactics’
(Bloomberg) -- Billionaire hedge fund manager John Paulson has accused the management of Detour Gold Corp., the Toronto-based company in which he invests, of “bullying tactics.”
In a 20-minute speech that was webcast ahead of a Dec. 11 special shareholders’ meeting, the founder of Paulson & Co. urged Detour investors to vote to replace the miner’s board. The hedge fund repeated claims that Detour executives have mismanaged the company.
“Despite our best efforts, the Detour board has used bullying tactics against us,” Paulson said. Accompanied by Paulson & Co. partner Marcelo Kim, the two provided detail on many of the complaints that have been hashed out publicly in what has become an increasingly heated proxy battle. “I think this board makes shareholders the laughingstock of the investment community.”
Since Paulson first took its complaints with Detour public in June, initially pushing for the miner to consider putting itself up for sale, each side has accused the other of providing misleading information. Detour also has served Paulson with a lawsuit, which Paulson called “frivolous.” Much of the battle has been waged in a volley of news releases, letters, an animated video and now Paulson’s webinar, all aimed at swaying investors.
‘Recipe for Disaster’
In its latest letter to shareholders, Detour said Paulson has resisted all its attempts to compromise and said the hedge fund’s proposed overhaul would send the miner “backwards.” While the miner sees value in appointing two of Paulson’s nominees, it said replacing the entire board “is a recipe for disaster.” Detour says it will resume its search for a replacement for interim Chief Executive Officer Michael Kenyon the day after the proxy fight ends.
“We have already stated our response, that a lot of his information is misinformation,” Laurie Gaborit, head of investor relations for Detour Gold, said Friday by phone. She declined to comment further on Paulson’s presentation.
Read more: Detour makes case to shareholders in press release
As chairman and now interim CEO, Kenyon has overseen a massive loss of shareholder value, Paulson said. “We need to send a message to management, to boards and to the industry that entrenched boards that use their position of responsibility solely to enrich themselves will not be tolerated by shareholders.”’
Detour’s principal asset is the Detour Lake Mine in northeastern Ontario. The company’s shares soared following the initial news of Paulson’s activist campaign, but have since fallen and are down more than 30 percent year-to-date. Paulson says it owns 5.7 percent of Detour.
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