THE BUCKS COUNTY COURIER TIMES
Tuesday, August 25, 1998
YBM facing shareholder revolt
Investors called for a shareholders meeting to replace the board of directors. Management, wracked by assaults from all sides, is weighing the ultimatum and is still looking for lawyers and accountants to help rescue the enterprise.
By Bill Yingling
Courier Times
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Frustrated by an inability to spur change at YBM Magnex Inc., the troubled company's "most significant" shareholders are now trying to oust the board of directors.
VC & Co. Inc., a Toronto company that advises shareholders, said YBM stockholders, most of whom are Canadian mutual and pension funds, have called for a meeting to remove and replace the existing directors.
The announcement is another major step in the fall of YBM Magnex Inc., whose stock value collapsed after the company fell under the scope of a U.S. investigation of Russian mob activity and after it was abandoned by a major international accounting firm and some of its Canadian lawyers.
The decision to call for the shareholders meeting followed the collapse of talks initiated by "Canadian institutional shareholders," according to an announcement by VC & Co. Inc.
"We have attempted to persuade this company that change was needed in the way it conducted its affairs and in the constitution of its board of directors," said G. Wesley Voorheis, managing director of VC & Co. Inc., in a written statement. "The shareholders also wanted an opportunity to independently identify and assess the issues affecting the company."
"It has become apparent to us that the present board and management are not prepared to make the changes which the company's most significant shareholders believe are required," Voorheis added.
Voorheis said shareholders sought the resignations of Igor Fisherman, Michael Schmidt and Kenneth Davies as directors, but that senior management told him the three men, who have emerged as controversial figures in the structure of the international magnet manufacturer, have refused.
According to Voorheis' statement, if the directors do not call a shareholders meeting within 21 days, the shareholders will call the meeting, as authorized under corporate law.
Trading of YBM stock has been halted on the Toronto Stock Exchange since May 13, the day of the raid, because the company has failed to file audited 1997 financial statements with Canadian securities regulators.
YBM officials released a statement yesterday acknowledging that they received the call for the shareholders meeting.
"The board of directors is reviewing this requisition with its legal advisors and will continue to discuss the requisitions with the requesting shareholders' representative, Voorheis & Co.," the statement said.
YBM also said that it has hired Douglas A. Koop as chief operating officer. He previously served in management posts at Crucible Material Corp. and at Philips Electronics North America Corp.
The YBM statement also said the company is talking with an undisclosed law firm to represent the company in Canada. Until a firm is selected, it is relying on its legal counsel in Calgary, McLeod & Co.
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