Sacked CEO fights to replace Polar Star board

Ex-Polar Star Mining (PSR-V) president and CEO, Douglas Willock, is rallying shareholders to help him replace the company’s board of directors, namely the executive chairman, Stephen G. Roman.

Willock, who owns about 10% of Polar Star and is still a member of the board, was sacked on Jan. 30. Polar Star’s CFO, Adam Rochacewich, has replaced him as interim president.

“I was advised that my dismissal was the direct result of my requisition for a shareholders’ meeting,” Willock said in a statement. “I am continuing my fight to restore shareholder and stakeholder confidence in Polar Star.”

Wes Hall, CEO of Kingsdale Shareholder Services, says the first move to replace certain members of the board was included in the terms of a financing with GMP Securities and Deacon and Co. in late 2008. The financing was rejected.

“They felt (Roman) was not financeable, that him being in control would not be in the best interest of shareholders,” Hall says. “They felt they need someone like Doug, who knows the company well, who can get money and build money for shareholders.”

Willock then called for a shareholders’ meeting on Jan. 26. Three days later the board appointed a special committee to consider Willock’s request, but then voted to fire him the next day.

On Feb. 4, Polar Star announced a new financing with D&D Securities to raise a between $3.15 million and $8 million at a price of 35¢ per unit, which includes one share and one warrant exercisable at 45¢.

Willock, who has received written support from 54% of shareholders, filed a claim against Polar Star and Roman with the Ontario Superior Court of Justice.

Part of the claim sought to prevent the D&D financing from closing two days after it was announced.

An agreement reached between both parties before a second meeting with a judge extended the financing to Feb. 13 or beyond, allowing time for GMP to exercise its 50% participation right – an agreement made last July. GMP was not mentioned in the original D&D financing announcement.

The judge endorsed the resolution between Willock and Polar Star. Under the terms, Polar Star cannot interfere with the shareholders’ right to hold a meeting and will abide by the recommended date for the meeting set by a special committee.

The company must also give Willock reasonable access to operational updates, but he must not interfere with the company’s day to day operations.

Hall, who is advising Willock, is hoping the shareholders’ meeting will be set in the next 30 days. At that time they will vote on a slate of new candidates chosen by Willock.

Hall says Willock may keep a few of the existing board members on his roster. The vote was tied when the board moved to fire Willock. Roman, as chairman, had to exercise the tie-breaking vote, which means he voted twice against Willock.

No other reasons were given as to why Willock wanted to replace Roman or any of the other board members.

“It’s a matter of opinion of these investors that this is not the person they want to run the company,” Hall says. “It happens all the time.”

Willock’s lawyer, Walied Soliman at Ogilvy Renault, says that because Willock has more than half of shareholders are backing him, he is in good shape.

“Our view is that the best thing the board of Polar Star can do right now is bring an end to this unfortunate saga and hold a shareholders meeting at the earliest possible date,” Soliman says.

No one from Polar Star could be reached for comment but a company statement said that that Willock’s press release titled “Polar Star’s precipitous actions reversed in settlement before Ontario Court” was misleading.

In a retaliatory statement, Roman said “that the Court found Polar Star’s action to have been ‘precipitous’ is regrettable and factually incorrect.”

Polar Star listed on the TSX in August 2007 after a reverse takeover transaction. Willock, whose background is in investment banking, started the company in 2003. The company has 17 exploration projects in Chile and a project in BC

Roman is resource financier who was involved with Denison Mines, founded by his father Stephen B. Roman, as well as a series of mineral and oil and gas juniors.