LONDON, April 3, 2019 /PRNewswire/ -- M&G Investments, the investment manager of approximately 16.5% of the shares of Methanex Corporation ("Methanex" or the "Company") (TSX:MX) (Nasdaq: MEOH) today released the following open letter to its fellow shareholders.
Dear Methanex Shareholders,
Our public engagement regarding Methanex has been focused on our concerns related to capital allocation and corporate governance – namely the Company's risk profile and the Board's oversight of management. This focus has not changed. Neither has our approach: we continue to believe that Methanex and its shareholders would benefit greatly from the addition of new, independent perspectives to the Board.
M&G's nominees will improve the dynamic in the board room
Our nominees bring many important skills to the table. One of the most crucial elements they offer is their independence of management – and with it a willingness to ensure effective oversight.
The incumbent Methanex Board includes a number of individuals with methanol industry experience. We do not dispute that. What we believe it lacks is people who are willing to challenge management, ask probing questions and always keep in mind the best interests of the Company and all shareholders. In our view, these are principles of good corporate governance that are relevant and apply across all industries.
The dynamic on the Board needs to change. Electing our four nominees that we have put forth would improve this dynamic by adding real independence, as well as specific skill-sets and expertise – in the areas of governance, finance and commodities – that will prove valuable.
Our nominees offer the following:
- Lawrence Cunningham – Independent perspective, corporate governance expert, legal scholar, Canadian public company board experience.
- Paul Dobson – Independent perspective, extensive energy experience, interim CEO of a Canadian public company.
- Patrice Merrin – Independent perspective, commodities experience, expertise with large-scale capital projects, high-level governance skillset.
- Kevin Rodgers – Independent perspective, commodity cycle experience, finance, leverage, chemistry degree.
To be clear, we are not asking for control of the Methanex Board. We are asking that four new directors, entirely independent of both management and us, and not beholden to us in any way, replace four directors who have each served over 12 years on the Board.
Setting the record straight
In their recent letter, Methanex made several incorrect assertions about M&G's intentions. Here are the facts:
- As Methanex's latest letter makes clear, the Company essentially agrees with M&G's view that finding a suitable strategic partner for Geismar 3 that delivers more than just money is their preference. This goes a long way towards justifying our argument that it is critical the Company has a strategic partner for this project.
- M&G's limited share sales were entirely necessitated by internal compliance concerns. Specifically, the only reasons we sold Methanex shares were to satisfy our fund concentration limits and internal risk controls related to total share of firm ownership of a given company. These share sales were not a reflection of our view of the outlook for Methanex, and in fact the Company remains by far the largest holding in M&G's Global Dividend Fund.
- M&G is not pushing for the removal of CEO John Floren. To be clear, we support investment in further capacity, but we do not support taking on undue risk that would make Methanex extraordinarily dependent on the price of methanol. Our nominees will offer meaningful help to the CEO.
- We are not trying to micromanage the CEO's operational decisions – rather, we are pushing for a Board that exercises more active oversight of management and risk. Our main concern with Geismar 3 is the high level of potential financial risk in the event of a period of weak methanol pricing during the project's construction – which we believe is potentially so large that this has become a governance and oversight issue. We support the project as long as risk is shared. In our view, the risk of pursuing the project alone, and the fact that the Company is in danger of handcuffing itself financially on a long-term basis, highlight the urgent need for changes on the Board.
A critical choice for long-term value
M&G is not an activist or a hedge fund. It is a respected institutional money manager that has not conducted proxy contests in the past. As a traditional, long-only investor M&G is helping to manage the long-term savings of millions of people across Europe, Asia and the Americas and we understand deeply the importance of careful stewardship of capital and management of risk. And, as an 85-year old institution that has held a number of our positions in companies for decades, we bring a long-term perspective to bear on our investments.
We own 16.5% of Methanex and have held this investment for over a decade.1 Our aim is to discourage Methanex from taking on excessive risk and we intend to continue to hold our investment in Methanex for the long-term.
M&G has provided its fellow shareholders with the opportunity to replace four directors – Bruce Aitken (an ex-CEO of Methanex), Howard Balloch, Phillip Cook and Janice Rennie – each of whom has served more than 12 years on the Board and therefore would potentially no longer qualify as independent under most corporate governance regimes, such as in the UK (where a director having served on a board for more than nine years is specifically listed by the Corporate Governance Code as a factor indicating a lack of independence), and one of whom was an executive director of Methanex – with four outstanding nominees, who are independent, experienced, will challenge management and act in the interests of all shareholders.
Please vote on the BLUE proxy card for the election of Lawrence Cunningham, Paul Dobson, Patrice Merrin and Kevin Rodgers, for the Board of Methanex.
If you have any questions or need assistance in voting your BLUE proxy card, please call our proxy solicitor, D.F. King &Co., Inc., at (800) 864-1460 (toll-free) or (212) 269-5550 (call collect).
M&G Investment Management
M&GPrudential has c. $338 billion of assets under management (as at Dec 2018) and has more than 7 million customers in the UK, Europe, Asia and the Americas including individual savers and investors, life insurance policy holders and pensions scheme members.
D.F. King & Co., Inc.
Edward McCarthy / Geoffrey Weinberg: 1-212-269-5550
Required Information Under Canadian Law
Information in Support of Public Broadcast Exemption
M&G Investment Management Limited (MAGIM) is relying on the exemption under section 9.2(4) of National Instrument 52-102 – Continuous Disclosure Obligations to make this public broadcast solicitation. The following information is provided in accordance with corporate and securities laws applicable to public broadcast solicitations. This solicitation is being made by MAGIM, and by M&G Global Dividend Fund and M&G (Lux) Investment Funds 1 (collectively, "M&G"), and not by or on behalf of the management of Methanex Corporation ("Methanex"). The head office of Methanex is 1800 Waterfront Centre, 200 Burrard Street, Vancouver, British Columbia, V6C 3M1.
MAGIM has filed an information circular dated March 25, 2019 (the "M&G Circular") containing the information required by Form 51-102F5 – Information Circular in respect of its proposed nominees for election at the upcoming annual meeting of Methanex shareholders on April 25, 2019 (the "Annual Meeting"). The M&G Circular is available on Methanex's company profile on SEDAR at http://www.sedar.com.
Proxies may be solicited by proxy circular, mail, telephone, telecopier, email or other electronic means, as well as by newspaper or other media advertising and in person by managers, directors, officers and employees of M&G who will not be specifically remunerated therefor. In addition, M&G may solicit proxies by way of public broadcast, including press release, speech or publication and any other manner permitted under applicable Canadian laws. M&G may engage the services of one or more agents and authorize other persons to assist it in soliciting proxies on behalf of M&G. The costs incurred in the preparation and mailing of the M&G Circular or proxy solicitation will be borne directly and indirectly by M&G. M&G has not yet determined whether it intends to seek reimbursement from Methanex of such solicitation expenses.
M&G has entered into an agreement with D.F. King & Co., (D.F. King) pursuant to which D.F. King has agreed that it will provide certain consulting and related services, including acting as M&G's proxy solicitor. Pursuant to this agreement, D.F. King will receive an initial fee of $10,000 and an additional fee of $200,000 upon the mailing of final proxy materials, plus an additional fee for telephone calls and telecommunication charges in an amount to be agreed upon by the parties. In addition, D.F. King may be entitled to a success fee on the successful completion of a solicitation, as determined by M&G in consultation with D.F. King.
Proxies may be revoked by a registered holder of Methanex shares (i) by completing and signing a valid proxy bearing a later date and returning it in accordance with the instructions contained in the accompanying form of proxy; (ii) by depositing an instrument in writing executed by the shareholder or by their attorney authorized in writing, as the case may be: (a) at the registered office of Methanex at any time up to and including the last business day preceding the day the Annual Meeting or any adjournment or postponement of the Annual Meeting is to be held, or (b) with the Chairman of the Annual Meeting prior to its commencement on the day of the Annual Meeting or any adjournment or postponement of the Meeting; or (iii) in any other manner permitted by law. Proxies may be revoked by a non-registered holder of Methanex shares at any time by written notice to the intermediary in accordance with the instructions given to the non-registered holder by its intermediary.
None of MAGIM, M&G Global Dividend Fund or M&G (Lux) Investment Funds 1 or any of their associates or affiliates (i) has any material interest, direct or indirect, by way of beneficial ownership of securities of Methanex or otherwise, in any matter to be acted upon at the Annual Meeting, other than the election of directors, or (ii) has had any material interest, direct or indirect, in any transaction or proposed transaction since the commencement of Methanex's last financial year that has materially affected or would or could materially affect Methanex or any of its subsidiaries.
1 Methanex has been the largest holding in M&G's Global Dividend Fund since February of 2015. Methanex's shares have underperformed by -10% relative to the MSCI World Index since then.
SOURCE M&G Investments