Paulson Notes Detour’s Continued Entrenchment and Insider Selling
August 28 2018 - 12:18PM
Paulson & Co. Inc. (“Paulson”) criticized the decision by the
Board of Directors of Detour Gold Corporation (TSX:
DGC) ("Detour Gold" or the "Company”) to force shareholders to
wait until December 11 before being able to vote on a new
independent Board. The latest entrenchment tactic impedes and
delays Paulson’s efforts to hold the Board accountable for ongoing
substantial value destruction. Many significant shareholders
have publicly endorsed replacing directors.
“It is inexcusable that the Board delayed the meeting and
refused to hold itself accountable to shareholders,” said Marcelo
Kim, a Partner at Paulson. “Detour shareholders will finally have
an opportunity to end the protracted destruction in shareholder
value suffered at the hands of this Board. The incumbent
directors have approved three life of mine plans in three years,
each with worsening economics, revealing they are unqualified to
question underlying assumptions and evaluate the risks associated
with running a world class mine.”
Insiders Selling SharesRecently and
revealingly, insiders questionably exercised options and sold
shares, preferring to line their pockets with cash instead of
investing along-side with shareholders. Seven insiders traded
and sold 188,427 shares, worth $2,375,767 in the Company starting
late July. These actions demonstrate that the insiders have
no confidence in their own plan and serve to highlight the
perpetual misalignment of incentives with shareholders.
Paulson, which has been a shareholder in Detour Gold since
2009, has not sold any shares in the Company since January
2017.
Interim Chief Executive Officer Michael Kenyon sold more than $1
million worth of stock days after stating: “we remain firm in our
belief that the actions we are taking will deliver long-term value
to our shareholders.” The magnitude of share sales by so many
insiders, coupled with their already minimal holdings in Detour
Gold, is a shocking betrayal to investors who have held the stock
only to see the value of it drop significantly.
Questionable Meeting PracticesThe voting
results from the May 2018 Detour Gold meeting of shareholders are
questionable. The Company’s disclosure of revisions to its 2017
Life of Mine plan was made so late in the proxy voting process many
shareholders had already voted. Paulson is concerned that the
Company may try to employ similar tactics to try and manipulate the
upcoming meeting through procedural tactics, such as “vote buying”,
where brokers are paid for shareholder votes they submit.
However, Paulson will continue to explore all options to ensure
that this meeting is held in a fair and timely manner for the
benefit of all shareholders.
Paulson previously announced the candidates that will stand for
election to the Detour Gold Board of Directors and will file a
proxy circular in due course.
AnnexThe following table highlights recent Detour Gold insider
trading and share sales:
|
Name |
Date |
Options Exercised |
Exercise Price |
Shares Sold |
Price |
Proceeds |
|
Drew AnwyllSenior Officer |
July 30 |
33,000 |
$10.53 |
33,000 |
$12.54 |
$413,820 |
|
Robert Doyle1Director |
July
31 |
12,500 |
$10.53 |
12,500 |
$12.82 |
$160,251 |
|
Laurence GaboritSenior Officer |
July 30 |
6,000 |
$10.53 |
6,000 |
$12.63 |
$75,780 |
| Francis HerediaSenior Officer |
July
30 |
27,000 |
$3.93 |
27,000 |
$12.58 |
$339,660 |
|
July 30 |
3,600 |
$10.53 |
3,600 |
$12.57 |
$45,252 |
|
Michael KenyonDirector andSenior Officer |
Aug.
8 |
90,000 |
$10.53 |
82,927 |
$12.73 |
$1,055,660 |
| James MavorSenior Officer |
Aug. 9 |
8,000 |
$10.53 |
8,000 |
$12.30 |
$98,400 |
| Aug.
13 |
6,400 |
$10.53 |
6,400 |
$11.33 |
$72,512 |
|
Jonathan RubensteinDirector |
Aug. 3 |
9,000 |
$10.53 |
9,000 |
$12.71 |
$114,432 |
|
TOTAL |
|
|
|
188,427 |
|
$2,375,767 |
| |
|
|
|
|
|
|
[1] Mr. Doyle’s SEDI form appears to show he did not sell any of
the Common Shares underlying his Options, however, it lists a unit
price of $12.8201 for his exercise of Options. Based on this, it is
highly probable he actually sold the Common Shares he received but
made an error with his form. The table includes information as if
he did in fact sell his underlying Common Shares.
The information contained in this news release does not and is
not meant to constitute a solicitation of a proxy within the
meaning of applicable securities laws. Shareholders are not being
asked at this time to execute a proxy in favour of the Paulson
nominees. In connection with the December 11 meeting (for which
there is not yet a record date), Paulson may file and mail a
dissident information circular in due course in compliance with
applicable securities laws.
A copy of this news release may be obtained on Detour Gold's
SEDAR profile at www.sedar.com.
About Paulson & Co. Inc.
Paulson is one of Detour Gold’s most important investors,
exercising control or direction over approximately 5.4% of Detour
Gold’s shares. Having first invested in the Company nine years ago,
Paulson previously provided C$280 million in direct equity and
US$250 million in convertible notes to finance its mine completion.
Paulson, along with several other major shareholders in the
Company, has grown increasingly frustrated by the Company’s
inability to appropriately manage shareholders’ assets, having
destroyed billions of dollars of value in the process.
Paulson, founded in 1994, is an investment
management firm with offices located in New York, London and
Dublin.
Contact Details
Investors:MacKenzie Partners, Inc.Dan Burch & Jeanne
Carr800-322-2885
Media:Longview Communications & Public AffairsPeter
Block416-649-8008
Joel Shaffer416-649-8006