Analysts denounce linking dividends with `poison pills’

Inco’s(TSE) plans to institute a recapitalization plan that would include a shareholders’ rights plan, often known as poison pills, and a special $10(US) dividend has prompted a group of securities analysts to take a public stand on the issue.

While avoiding any specific reference to Inco, the 19-year-old Mineral Resource Analysts Group (MRAG) issued a public statement following a 6-hour meeting attended by 27 of the group’s 40 members.

“On principle, MRAG opposes linking a vote on a `shareholders’ rights’ plan to the payment of an extraordinary dividend,” says the group of investment analysts who represent most of the major Canadian institutional investment dealers and several institutional investor organizations.

The resolution was adopted unanimously with one abstention. It is the first time the group has taken a public stance on a management-shareholder issue and only the second time the group has taken a public stance on any issue. The group’s president, Manford Mallory, says the decision to make a public statement was the result of an “overwhelming majority” although it was not unanimous.

Mallory pointed out the members represent a wide cross section of opinions on the merits of shareholders’ rights plans and also a cross section of opinions on the merit of special dividends. However, the membership felt that “it was inappropriate to combine the two. Each issue should succeed or fail on its own merits.”

In going public, the membership felt the issue was “precedent setting for securities markets” and carried “huge ramifications,” Mallory said.