The battle for control of Weyburn Inland Terminal has shifted to the courtroom after the board of directors tried to stop a group of dissident shareholders from soliciting proxies to scuttle the deal.
The judge denied that request but did order the dissidents to amend the information circular they presented at a Feb. 4 meeting.
The board has approved, and is seeking shareholder approval for, a $94.5 million takeover of WIT by Parrish & Heimbecker. The dissident group, including two directors who resigned late last year, want the company to remain independent.
Read Also
Manitoba Parkland research station grapples with dry year
Drought conditions in northwestern Manitoba have forced researchers at the Parkland Crop Diversification Foundation to terminate some projects and reseed others.
The vote is expected to take place at a Feb. 28 meeting.
Chief executive officer Rob Davies, speaking for the company, said the board had to take the matter to court because the directors have an obligation to make sure all shareholders receive accurate information.
He said the dissidents’ circular didn’t meet legal requirements because it wasn’t sent to all shareholders, wasn’t filed on the System for Electronic Document Analysis and Retrieval (SEDAR) and didn’t set out a plan for the company’s future.
“If somebody else has a case to make, that’s fine,” Davies said.
“The point is, there are rules that everybody has to follow.”
He said one of the lawyers acting for the dissidents said they have no plan other than voting down the deal.
Dale Mainil, speaking for the dissidents, said they admitted in court that certain information was missing from the circular.
The amended version was to be posted on SEDAR Feb. 14 and immediately sent to shareholders.
He said those speaking at the Feb. 4 meeting thought they weren’t allowed to say much about what they planned for the company because it would trigger a break fee.
“We thought we complied,” he said.
“We thought everything was covered.”
However, Davies said the $4 million break fee is a standard type of agreement in a business transaction such as the proposed takeover.
He said it is only triggered if another potential buyer offered a better price for WIT without doing any of the due diligence that WIT and P&H had to do to reach their agreement.
“If the company breaches its obligations, the break fee applies,” he said.
“Equally, if Parrish breaches their obligations, it’s the same cost to them.”
Addressing one of the concerns expressed at the Feb. 4 meeting, Davies said the owners of grain condos at WIT should have the same arrangement with P&H as they do now.
“The board is still very confident that what they’ve done, the work they’ve put in, the recommendation they’ve made is still the correct one,” he said.
Liquidity is among the reasons WIT began exploring potential buyers.
Mainil said the dissident group, which includes 11 men seeking nomination to the board of directors, has ideas about how to improve liquidity.
“We have good momentum,” he said.
“A lot of shareholders are coming to us, and they don’t want to sell.”
WIT was the first farmer-owned and operated inland grain terminal on the Prairies. It opened in 1976, and the original capacity of one million bushels has since quadrupled.
A takeover attempt by United Grain Growers in 1998 was voted down.
About 1,500 shareholders are eligible to vote Feb. 28. The takeover proposal would see P&H pay $17.25 per share.
In an open letter to shareholders, the WIT board said the decision had not been easy, but “the board is of the view that the proposed transaction will ensure that there continues to be a strong competitive force in the local area, that condo owners will be treated fairly, that $17.25 per WIT share is a fair price and the transaction provides 100 percent liquidity to all WIT shareholders.”
