Nickel and energy producer Sherritt International Corp. (S) is poised to fend off an attack by activist shareholder George Armoyan, helped by the soaring price of the industrial metal.
Nickel has risen 32 percent this year, propelling Sherritt to top performer among its Canadian base-metal peers, as Armoyan has sought to convince investors to replace three of the Toronto-based mining company’s nine directors with himself and two others.
“I think for George, the worst thing that could have happened was nickel prices went up,” David Taylor, the Toronto-based chief investment officer of Taylor Asset Management Inc., said by telephone last week. “He would have had a much better chance if this stock was still hovering around three bucks.”
Sherritt, which closed today at C$4.68 in Toronto, has advanced 26 percent this year on an Indonesian ban on nickel-ore exports. The threat of wider economic sanctions on Russia for President Vladimir Putin’s annexation of Crimea and skepticism of his efforts to defuse tensions in eastern Ukraine also lifted the price of the stainless-steel ingredient. Nickel generated 50 percent of Sherritt’s first-quarter sales, the company said yesterday in its earnings statement.
“The nickel price has taken the urgency out of his story,” Taylor said. Armoyan is “fighting an uphill battle.”
‘Private Club’
Armoyan has been publicly agitating for changes in the board since late last year when, as chief executive officer of Halifax, Nova Scotia-based Clarke Inc. (CKI), he requested a special meeting of Sherritt shareholders. Since then, Armoyan has likened Sherritt to a “private club” run for the benefit of the directors and called for the removal of CEO David Pathe.
“Sure, nickel’s up. But do people just want to rely on higher commodity prices to bring about operational efficiencies and proper business execution?” Armoyan said in a phone interview last week. “You just don’t want to leave it to chance.”
Clarke, with a market value of C$157.2 million ($143.4 million), is focused “on acquiring undervalued or underperforming businesses with hard assets” and working with management to improve operations, according to a presentation on its website.
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