GCSA to contest Equity vote

CSA Management Ltd. plans to contest the outcome of a close vote at a special meeting of limited partners of Equity Preservation Corp. and Equity Reserve Corp., two closed-end flow-through funds. The vote, which legally required 75% or better for management of the two funds to pass its proposed changes for the company, came in at 74.08%.

Following a lengthy adjournment and a recount, the vote came back as 75.9%. Equity’s management has proposed a slate of changes which will effectively change the business of the two funds. Following their merger under the banner of Equity Preservation, the fund will be able to acquire more than 20% of a junior resource company, take effective control of companies in the fund and purchase direct equity interests in exploration projects and mines — becoming essentially an operating mining company.

Csa Management, which holds an interest in the funds and is the investment and exploration manager, opposed the changes claiming that Equity’s management has little experience in the mining sector. Csa says that the proposed changes will expose investors to markedly increased risk by focus ing on just a few junior exploration companies. Csa, which charges a fee based on the net asset value of the funds for its mining and investment advice, was also removed as the advisor following the vote.

“The shareholders have dissapproved of this motion,” Robert McEwen, president of csa, told The Northern Miner. Many of the proxies which were solicited by csa and arrived during the meeting just prior to the vote, were disallowed in the recount. “If those proxies were allowed, we would have blown them out of the water,” McEwen adds. He also argues that short notice was given for the special meeting. “Pemberton Securities only had four days,” to solicit proxies on csa’s behalf. However, Dominion Securities and Midland Doherty worked for more than 20 days trying to solicit proxies for Equity’s management, McEwen adds. As a result of the close vote, csa plans to take legal action.