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The current directors of recent Millennium Iron Corp. will keep their jobs after they narrowly fended off a dissident shareholder group inside a proxy fight.
The existing board was backed by 58.23 per cent of shareholder votes cast in a special meeting in Toronto on Tuesday morning, as the dissidents received 41.77 percent, according to a preliminary count. The dissidents, who want New Millennium to slash spending, tried to remove six of the company’s nine directors and replace them with four new nominees.
The key question entering the meeting was which side Tata Steel Ltd., the Indian steel giant, would support. Tata owns 22.6 per cent of recent Millennium shares, and its vote would determine the winner. New Millennium was confident Tata would back management, also it ultimately did.
If Tata’s vote is stripped out, the dissidents got much more votes compared to current board.
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“(Tata’s decision) is fairly disappointing considering the level of support we’d from the minority shareholders,” Susan Milton, the leader from the dissident group, said within an interview.
Robert Patzelt, New Millennium’s chief executive, said he was disappointed the dispute wasn’t settled before the vote.
“We must get back to business now when practicable,” he said. “We must double up our efforts because we’ve lost some time to momentum.”
The dispute revolved round the company’s central strategy. Montreal-based New Millennium owns vast iron deposits in Canada’s Labrador Trough, nevertheless its ambitious plans to develop them were thwarted by plunging global iron ore prices.
The dissidents, led by Milton and her family, want the organization to slash spending whenever possible before the iron market recovers. They are particularly unhappy about compensation to board and management, which they think is far too high for a struggling junior mining company. Patzelt received total compensation of $469,759 this past year, according to a proxy circular, while at least five other executives received more than $250,000.
Patzelt and the team want to move forward having a slimmed down iron project within the Labrador Trough called NuTac. They believe that halting work would damage relations with stakeholders and disrupt all of the momentum the company has generated.
“If you don’t believe that iron ore is originating back in two years, (New Millennium’s) strategy doesn’t make any sense,” Milton argued. Her family owns about seven per cent of the stock.
Patzelt said the company’s plan is “flexible” and “measured” and that he welcomed more feedback on it from shareholders.
Paul Davis, an attorney at McMillan LLP who advised the Milton family, said the lines of communication will “always be open” between the two sides.
Proxy advisory firms Institutional Shareholder Services and Glass Lewis & Co. both recommended that New Millennium’s shareholders elect a brand new board having a mixture of nominees from the company and also the dissidents. Patzelt said he disagreed with the advisory firms on some tips, but noted that they helped shareholders obtain a better understanding of the dispute.
Iron ore, which peaked at a lot more than US$190 a tonne this year, has become worth about US$57. The global market is heavily oversupplied because of soaring production from Australia and Brazil and weakening demand in China.
The changing market conditions have crushed New Millennium’s stock price, which is down a lot more than 97 per cent from its 2011 peak.
pkoven@nationalpost.com
Twitter.com/peterkoven
