Ron Thiessen: Taseko Chairman on Fending Off A Self-Dealing New York Activist Hedge Fund
An activist group recently bought 5% of Taseko Mines to force an extraordinary meeting of the board with a goal of replacing board members and reshaping the direction of the company. According to Chairman Ron Thiessen, this comes despite the activist group having limited knowledge of how to run a mining company. Gibraltar, Taseko’s flagship mine, is one of the lowest grade copper mines in the world and requires a very competent management to turn a profit.
Feelings are running high and the activist group is seen as antagonistic, a corporate raid attempting to asset strip the company. The group has labelled certain assets valueless that are actually valuable and want to defer stripping which would sterilize the ore body and dramatically reduce the life of the mine.
The activist group have not stated why they have chosen Taseko but divestiture could result in bonds being paid at face value rather than the current 50% discount. This group has twice as much invested in bonds as they do in the stock. How these groups normally operate is by gaining an interest in the company’s debt then taking over the board. They then elevate the debt to a secured position and consequently strip the assets.
The Taseko take over has become a major deal in Canada and Rob Thiessen provides us with an exclusive interview to go over his side of the conflict
Talking points from this week’s interview:
• How do activist groups operate to strip companies?
• What makes a company vulnerable to corporate raiders?
• Negative activism vs positive activism
• Most attempts at corporate raiding actually fail
• The Do’s and Don’ts of Fund Activism in the Resource Sector