Baja capitulates on mount kellett boardroom demands - Dressmaking Fabrics - TR Fabrics Manufacturer

At the heart of the struggle were two narratives. Mount Kellettargued Baja, under Greenslade's management, needed more oversight,while Baja warned Mount Kellett was merely gunning to get morecontrol of the company and that it would use board representationto its advantage. But the fight did not end with Baja's narrow victory. It blew upagain, with Mount Kellett making particularly targeted attacks onGreenslade, after Baja announced cost escalations at its Boleocopper project in Mexico, under construction, and an impending $246million funding shortfall. Making matters worse for Baja, after the shortfall was announcedits board crumbled as three directors, Ogryzlo, Seidler and GrahamThody, resigned.

Seidler said last week that a major reason for thedepartures was poor "information flow" from management to the boardparticularly as regards the size of the funding shortfall at Boleo. Baja management has maintained, however, the size of the shortfallwas as much a surprise to it as it was to the board. Mount Kellett was quick to make demands on the back of the fundingcrisis. At first, before the board resignations, it demandedGreenslade resign and that the Baja board appoint Lehner andWaisberg as directors. Then, following the board resignations, itadded Ogryzlo and Seidler to the list, who had agreed with MountKellett they would rejoin the board.

This, as far as boardroom appointments go, has now come to pass. The appointments were a clear victory for Mount Kellett, thoughwhat precipitated them is not clear. The possibility of anotherproxy battle amidst a funding crisis and fallout from the Boleocost escalation may have weighed heavily on Baja's management andboard. Comment on the Baja board appointments, however, was scarce Mondaymorning. Neither a Baja nor a Mount Kellett spokesperson could bereached as of presstime.

Seidler, contacted Monday morning, said he had no additionalinformation beyond Baja's press releases. As for comment onrejoining the board, he said, "Our interest is in the good of thecompany." The lack of comment leaves many questions unanswered, biggest ofall, what would become of Mount Kellett's demand for Greenslade toresign? Also, Mount Kellett petitioned the BC Supreme Court to appoint anauditor to investigate Baja's disclosure of the cost escalation atBoleo. Mount Kellett alleged Baja knew more than it let on in therun-up to the proxy battle. It is an allegation Baja has categorically denied.

But now, with the board appointments, would Mount Kellett drop thequest to have an independent auditor? Meanwhile on Monday morning Baja issued an update on its efforts tofind additional funding to build Boleo. While, Baja said it hadheld "positive" talks with its 30-percent Korean partners on theBoleo project, it also struck an urgent tone in the press release. Baja warned that if approval of additional funds was not swift thenit might run out of money by mid-June. Baja said it was "assessingits current obligations and what steps will be required if itcannot come to a timely financing arrangement." To meet the shortfall Baja said it had submitted a funding proposalto its Korean partners and that it had also sent confidentialityagreements to third parties that might take part in the project.Furthermore Baja said it had talks with brokers about financing butthen threw cold water on that prospect, saying "equity marketsremain difficult." SUBSCRIBE to Mineweb.com's free daily newsletter now.

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