Sacked CEO Fights To Replace Polar Star Board

Polar Star Mining’s (PSR-V, POSRF-O), ex-president and CEO Douglas Willock is rallying shareholders to help him replace the company’s board of directors — namely, executive chairman Stephen G. Roman.

Willock, who owns about 10% of Polar Star and is still a director, was fired on Jan. 30 by the board. Polar Star’s chief financial officer, Adam Rochacewich, has replaced him as interim president.

“I was advised that my dismissal was the direct result of my requisition for a shareholders’ meeting,” Willock said in a statement. “I am continuing my fight to restore shareholder and stakeholder confidence in Polar Star.”

Willock, Polar Star’s founder, had called for a shareholders’ meeting to replace the board.

Wes Hall, CEO of Kingsdale Shareholder Services and Willock’s adviser, says that as part of the terms of a financing late last year, GMP Securities and Deacon and Co. wanted certain members of the board replaced. The board rejected that condition and the financing.

GMP and Deacon “felt (Roman) was not financeable, that him being in control would not be in the best interest of shareholders,” Hall says. “They felt they need someone like Doug, who knows the company well, who can get money and build money for shareholders.”

Willock then called for a shareholders’ meeting on Jan. 26 with the intention of replacing members of the board. Three days later, the board appointed a special committee to consider Willock’s request, but then voted to fire him the next day.

On Feb. 4, Polar Star announced a new financing slated to close only two days later, on Feb. 6. The financing with D&D Securities was to raise between $3.15 million and $8 million at a price of 35¢ per unit, with each unit including one share and one warrant exercisable at 45¢.

Willock, who in a statement said he has received written support from 54% of the company’s shareholders, filed a claim against Polar Star and Roman with the Ontario Superior Court of Justice shortly after he was fired.

Part of the claim sought to prevent the D&D financing from closing as scheduled.

Prior to a second meeting with a judge, both parties agreed to extend the financing to Feb. 13 or later. The extra time would allow GMP the opportunity to exercise its 50% participation right — an agreement made last July. GMP was not mentioned in the original D&D financing announcement.

The judge endorsed the resolution between Willock and Polar Star. Under the terms, the company cannot interfere with its shareholders’ right to hold a meeting and will abide by the recommended date for the meeting set by a special committee.

The company must also give Willock reasonable access to operational updates, but he must not interfere with the company’s day-to- day operations.

Hall is hoping the shareholders’ meeting will be scheduled to take place by early March. At that time, shareholders will vote on a slate of new candidates chosen by Willock. Hall says Willock may keep a few of the existing board members on his roster. The vote was tied when the board moved to fire Willock. Roman, as chairman, had to exercise the tie-breaking vote, which means he voted twice against Willock.

No other reasons were given as to why Willock wanted to replace Roman or any other board members.

“It’s a matter of opinion of these investors that this is not the person they want to run the company,” Hall says. “It happens all the time.”

Willock’s lawyer, Walied Soliman at Ogilvy Renault, says that because Willock has the support of more than half of Polar Star’s shareholders, he is in good shape.

“Our view is that the best thing the board of Polar Star can do right now is bring an end to this unfortunate saga and hold a shareholders’ meeting at the earliest possible date,” Soliman says.

No one from Polar Star could be reached for comment, but a company statement said that that Willock’s press release titled “Polar Star’s precipitous actions reversed in settlement before Ontario Court” was misleading as the agreement was reached in between meetings with the judge.

Polar Star listed on the TSX in August 2007 after a reverse-takeover transaction. Willock, whose background is in investment banking, started the company in 2003. The company has 17 exploration projects in Chile and a project in B. C.

Roman is a resource financier who was involved with a series of mineral and oil and gas juniors, and with Denison Mines (DML-T, DNN-X), which was founded by his father Stephen B. Roman.