Connor, Clark & Lunn (new home of ex-First Marathon tout Kaan Oran) expresses concern
Wednesday, August 26, 1998
Shareholders crank up pressure on YBM
By SANDRA RUBIN
The Financial Post
A move to oust the board of troubled YBM Magnex International Inc. is just the first step for a coalition of powerful institutional shareholders, the largest investor in the group said yesterday.
Connor Clark & Lunn Investment Management Ltd., owner of 16.06% of YBM stock, signed a request Aug. 21 forcing a shareholders' meeting to be called within 21 days.
But the Vancouver-based money manager says it is just one of a group of institutional investors that collectively own "probably 50% or more" of YBM stock.
Connor Clark director Gordon MacDougall said investors are disappointed YBM hasn't been more forthcoming.
The company has been rocked by a series of events -- from an FBI raid of its Philadelphia headquarters in an organized crime probe to the resignation of its auditors and the exit of two of its three Canadian law firms.
The stock (YBM/TSE) has been frozen by a cease trade order for more than three months and most money managers have written it down to zero for valuation purposes.
Connor Clark has about 6.5 million YBM shares, worth $93.3 million at the last trade price of $14.35.
"We've got to do something about it," said MacDougall. "It's our shareholders' money, so it's our responsibility to find out as much as we can about what's gone on."
He said his group is indifferent to YBM's move earlier this week to replace its chief operating officer, and to assertions it is negotiating with three international accounting firms to replace Deloitte & Touche LLP, which quit without signing YBM's 1997 financial report.
"The objective is to get a meeting," he said. "So anything else is immaterial. Whether it turns out to be acceptable or not, we'll wait and see after the meeting.
"Obviously, we're going to look at all the means we can to get money back to our clients."
But the investors are still hoping to avoid a nasty public showdown. Wesley Voorheis, representing the group, said he has given YBM's board a new proposal that could avert the shareholders' meeting.
He said it addresses some of the concerns that scuttled a possible deal last week, but gave no details.
The company is considering the proposal, he said, and "I'm hopeful in the next day or two or three, we'll come to some consensual arrangement here."
Voorheis said his group wants control of the board and to review the results of a forensic investigation of YBM's eastern European operations by Pinkerton Investigation Services this spring.
The group also wants to retain an auditor, produce audited financials, repair its relationship with the Ontario Securities Commission, get the cease trade order lifted and restore shareholders' confidence.
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