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The shareholder vote, originally to have been held on June 8 but subsequently pushed back to June 29 and then July 6, saw only 42% of Iamgold shares voted in favour of the management-backed merger. Iamgold held its meeting in the morning but then adjourned for a detailed ballot count. About 25 million shares were either voted more than once or voted by ineligible shareholders. The final count, with ineligible votes disallowed, was revealed at 4 p.m.
On the same day, a Wheaton vote scheduled for 11 a.m. was put off to 5 p.m. to accommodate the Iamgold count. Wheaton management cancelled that meeting after the Iamgold result was announced.
The vote by Iamgold shareholders sinks a merger deal that would have seen Wheaton shareholders trade each share for 0.55 of a share in a new company, to have been named Axiom Gold. Iamgold shareholders would have received one share of Axiom for each share of Iamgold. Joseph Conway, Iamgold’s president, would have taken over management of Axiom, with Iamgold’s William Pugliese and Wheaton’s Ian Telfer acting as joint chairmen of the board.
The deals left open to Iamgold and Wheaton shareholders are both takeover offers that had been rejected by the companies’ boards of directors. Golden Star Resources mailed out a revised takeover bid at the beginning of July in which it offered Iamgold shareholders 1.25 shares of Golden Star for one Iamgold, or 1.15 Golden Star shares and 50 cash. Iamgold’s board countered that Golden Star’s proposal effectively uses Iamgold cash to provide the cash portion of the bid.
Independent proxy advisory firm Fairvest had recommended that Iamgold shareholders vote for the Wheaton deal rather than take the revised Golden Star proposal. An earlier bid by Golden Star, offering a share-trade ratio of 1.15 and no cash, received a thumbs-down from both Fairvest and a committee of independent Iamgold directors.
Fairvest had, however, recommended that Wheaton shareholders vote down the friendly merger in favour of a bid from Coeur d’Alene. Coeur has now made four bids for Wheaton, starting at 0.649 of a Coeur share plus a cash distribution of $205 million, and rising to 0.796 of a Coeur share with a cash distribution of $570 million.
The most recent bid offers 0.796 of a Coeur share or $5.47 in cash, up to a limit of $570 million in cash. This did not change the maximum cash amount Wheaton shareholders would get — $1 per share — in the event all of them elected to receive cash. It did, however, increase the share exchange ratio, previously based at 0.731 of a Coeur share for one Wheaton.
In the event all Wheaton shareholders elect to receive cash, each would get $1 per share plus 0.65 of a Coeur share.
Wheaton’s independent directors had already recommended against the newest Coeur offer, arguing it would be funded in part by new Coeur debt and that Coeur already had “a risky financial strategy.” Coeur’s operating results have been weak in recent years, the company having posted losses of US$67 million, US$81 million and US$3 million in 2003, 2002 and 2001, respectively. In the first quarter of 2004, Coeur lost US$3.2 million on revenue of US$28.3 million.
Iamgold’s board released a statement following the vote reiterating its recommendation against the Golden Star offer. Conway said in the statement that management “will consider our shareholders’ objectives and review our position accordingly.”
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