Altius holds approximately 6.2% of the outstanding common shares of LIORC.
The primary purpose of the meeting was to request that the board of LIORC pay out excess cash on its balance sheet and resume a commitment to its passive, flow-through business mandate. Altius’ investment in LIORC is predicated upon LIORC adhering to a commitment to serve as a passive flow-through vehicle for royalties and equity dividends related to the operations of the Iron Ore Company of Canada (IOC). It was explained during the meeting that several recent decisions and actions undertaken by LIORC contradict this commitment in the opinion of Altius and have created considerable uncertainty for Altius and other shareholders.
Altius also took the opportunity at the meeting to repeat a suggestion that the segregation of LIORC’s royalty and operating level equity interests could provide significant value creation and risk-reward management benefits to all of its shareholders. The letter further detailed these positions and specifically requested that the LIORC board and management commit to:
- the timely payout of all excess withheld cash on its balance sheet in the form of a special dividend and to paying future cash dividends to the maximum extent possible, in accordance with its current articles and its publicly disclosed passive flow through mandate; and
- offering all shareholders an opportunity, through an advisory vote, to provide a mandate to the management and the board of LIORC to complete an internal restructuring that would economically segregate its IOC royalty and the IOC equity.
The letter concluded by expressing a desire to work constructively with the management and the board to address the matters raised and asked that a response be provided by 30 January 2019. On 1 February 2019, a response was received from the CEO of LIORC that unfortunately failed to provide any degree of commitment or intent to satisfy either specific request, including the payout of recently withheld excess cash amounts.
As these issues have emerged during the past number of months Altius has heard from other shareholders that share similar opposition to any change in LIORC’s current passive flow-through mandate and to the withholding of excess cash on its balance sheet. Including Altius, these shareholders have indicated ownership levels that we estimate to collectively represent between 25% and 30% of the issued and outstanding shares of LIORC. Conversely, Altius has not heard from a single LIORC shareholder that is supportive of the proposed change in mandate or the withholding of excess cash on the balance sheet.
While it remains the preference of Altius to work constructively and cooperatively with the management and board of LIORC, in light of the recent response, which has unfortunately served to heighten rather than alleviate our concerns, Altius will also now consider further options that may be available to it as a concerned shareholder.
Read the article online at: https://www.globalminingreview.com/finance-business/08022019/altius-expresses-shareholder-concerns-to-labrador-iron-ore-royalty-corp/