Detour Offers Paulson Concession on Board, ‘Disagreed’ on Sale
(Bloomberg) -- In an effort to ease an increasingly acrimonious standoff with one of its investors, Detour Gold Corp. says it’s offering Paulson & Co. a list of concessions, including a spot on the board and a pledge to consider any “new” ideas the hedge fund brings forward.
“We know the heavy expense and distraction of a proxy fight is not in the best interests of Detour Gold,” Detour Chairman Alex Morrison said in a letter dated Tuesday addressed to billionaire John Paulson, which was emailed to Bloomberg. “This is why we are writing to you today with a settlement offer that we believe is fair and reasonable.”
Detour said in a separate statement that Paulson & Co. rejected the offer Friday.
In emailed responses, Paulson & Co. said it “initiated” a discussion with Detour on Tuesday by sending the company a letter, and has provided the miner with two settlement alternatives. “We have not received a response to our good-faith offer other than through the media.”
Paulson has been pushing for major changes at Detour, including the possible sale of the company. On that front, Detour “disagreed,” Morrison wrote, but is prepared to add a Paulson nominee to its board, and to provide access to Detour’s financial and legal advisers who can provide insight into the “strategic opportunities” Detour has been working on. “Any new ideas your nominee brings forward will be carefully considered,” he wrote.
Paulson and Detour have been locked in a heated battle for months over how the Toronto-based company, which owns an open-pit mine in northeastern Ontario, should be run.
|Highlights of Detour’s letter:|
John Hathaway, general partner at Tocqueville Asset Management LP, a Detour shareholder, said he doesn’t support selling the company right now but does want to see improvements made to the board.
“The first order of business is to get the best possible board, and with that, improve the performance of the asset,” Hathaway said Friday by phone. “A sale now is not a good idea.”
“I’d like to see more than one new director and I would like to see perhaps two or three existing directors replaced by the Paulson slate,” he added.
In August, Detour said two board members were stepping down and would be replaced by three new directors amid pressure from Paulson.
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