Sunday, November 9, 2008

Rousseau's deal with Noront

A considerate reader has answered a question I asked in mid-October.

I observed, on October 13, that the hedge fund Rousseau Asset Management was challenging the incumbent board at Noront Resources Ltd. and I wondered aloud what was the inspiration for the fund's name? the painter? the Enlightenment philosopher?

So today I make an overdue acknowledgement of reader "Rosedale," who told me (on October 28, the very day on which the meeting was scheduled) that RAM is named after Canada's Lake Rousseau, where the fund's manager, Warren Irwin, has his boat.

Noted. Now ... what happened about the proxy fight?

The day before the meeting, October 27, Noront and Rousseau settled their differences. Noront's president, Richard Nemis, agreed to step down as Prez and to become instead "chairman emeritus" and "special advisor" to the board.

The office of president is now occupied by two men, Joseph Hamilton and Paul Parisotto, as a team. But they are doingso only on an "interim basis" while theboard looks for someone to take the job on permanently.

As to the question of who is to sit on the board (which is after all at least the headliner issue in most proxy fights), the two sides worked out an elaborate ballet. They jointly recommended the election of three nominees from the incubent board and four nominees from the challenge slate. So they have a seven seat board, right? Wrong.

Immediately after the election, by agreement, one of he nominees from the challenge slate and two of the nominees from the former incumbent slate resigned as directors. The challenge-slate resignee, Michael Woollcombe, was not replaced. But the two incumbent resignees, Maurice Stekel and John Blancheflower, were immediately replaced by two appointees nobody had nominated.

So the company now has a six-seat board of directors. One of these was a member of the previous board, three were from the challenge slate, and two are agreed-upon appointees from either.

Curious. And as theatrical in its own way as any drama ever barred from the City of Geneva.

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