WGI Heavy Minerals Calls Shareholder Meeting to Approve Capital Distributionadmin
WGI Heavy Minerals, Incorporated announced that its board of directors has approved a special cash distribution to shareholders in the amount of US$0.80 per share. This special distribution represents a return to the shareholders of up to US$19.5 million (including distributions on shares anticipated to be issued upon the exercise of restricted stock units or stock options) to shareholders of record on December 19, 2008. It is anticipated that the special cash distribution will be paid to shareholders on December 22, 2008.
The Company previously announced its intention to distribute US$0.80 per share in cash upon the completion of the sale of Transworld Garnet India (Pvt) Limited (TGI). The sale of TGI was completed on September 12, 2008 with effect on August 14, 2008 after substantially all of the proceeds of sale and repayments of debt were released from escrow and repatriated to WGI.
The special cash distribution will be made in the form of a return of capital to the extent that the return of capital does not exceed the paid-up capital of the Company’s shares and is not a taxable dividend for Canadian income tax purposes. The Company has sought a ruling from the Canada Revenue Agency to confirm the acceptable level of capital that may be returned to shareholders. It is estimated that the return of capital portion of the special cash distribution will be in the range of US$0.60 per share to US$0.80 per share. The balance of the special cash distribution, if any, will be distributed as a taxable dividend.
The portion of the special distribution that will be a return of capital is subject to the approval by shareholders of a resolution authorizing the reduction of the stated capital of the Company’s common shares and the receipt of a final advance tax ruling from the Canada Revenue Agency.
The Company will promptly request a shareholder meeting to approve the proposed reduction of stated capital. A proxy circular will be mailed to WGI’s shareholders in November for a meeting to be held on December 11, 2008. The record date for the shareholders meeting is November 11, 2008. At that meeting, shareholders will be asked to approve a reduction of stated capital for the Company’s common shares and a return of that amount of paid up capital reduction to the shareholders. To the extent this paid up capital reduction is not equal to US$0.80 per share the balance of the special distribution will be in the form of an ordinary taxable dividend.
The Company believes a special cash distribution of US$0.80 per share is currently appropriate and prudent given the completion of the sale of the Company’s investment in TGI and the current economic climate in the market place. The Board of Directors and management believe that this amount of special distribution allows the Company to realize its existing business goals and objectives.
The Company will regularly evaluate opportunities to return additional capital to shareholders after taking into account the market risks and opportunities facing the Company at that time and the Company’s financial results in general.
The Board of Directors elected Mr. Gordon Fear as its new Chairman. Mr. Fear, as Chairman of the Special Committee of the Board, was instrumental in leading a strategic review of the Company’s operations resulting in the sale of TGI. The Board also recognized the important role Greg Emerson, Interim CEO, has played during this transition. Mr Emerson was appointed CEO. The Board of Directors has significantly reduced the corporate directors committees and overhead.
WGI Heavy Minerals, Incorporated is a marketer of industrial grade minerals sourced primarily out of India, producer of industrial-grade garnet out of Idaho and Germany and manufacturer of replacement parts for ultra-high waterjet cutting systems in the U.S. The Company’s shares are listed on the Toronto Stock Exchange under the symbol WG.