Dayton chairman responds to shareholder revolt

In a letter to shareholders, Chairman Roland Horst described Dayton Mining (DAY-T) as being “on the right course,” and asked for support against a challenge posed by minority shareholder Manchester Securities.

Manchester began a proxy action in late May to replace Dayton’s board of directors with its own slate of nominees at Dayton’s June 17 annual meeting.

(T.N.M. June 8-14/98). One of Manchester’s goals is to rid Dayton’s board of its connections to Minorca Resources (MAR-T).

Horst responded to Manchester’s fear that Dayton will merge with Minorca by admitting that although Dayton has considered the transaction, it “has not made, nor does it expect to make, an offer to acquire Minorca.” As well, Horst note that Dayton shareholders should be aware that no major transaction with any significant shareholder will be carried out without prior shareholder approval.

Regarding Manchester’s assertion that Minorca holds an undue influence on Dayton’s board, Horst countered that the board was deliberately reconstituted last month to increase the number of directors unrelated to either Dayton or Minorca. Five of the seven directors have no past or present connection with Minorca. Three of those directors had served on Dayton’s board for a combined 19 years prior to Minorca’s acquisition of a 14.8% interest in Dayton. As well, Horst said he is no longer a Minorca officer, and that his only connection with that company is as a director.

He says that Manchester has failed to give Dayton credit for its recent effort to improve operations at the Andacollo mine or its pursuit of more than 12 merger, acquisition and investment opportunities over the last four months.

Horst criticized Manchester for not proposing its own plan for improving operations at Andacollo and for not offering a plan for Dayton’s corporate development. He further charged that Manchester has “seriously weakened Dayton’s options” by forcing the company to put $36 million in escrow at the request of lenders, pending a review that will follow the annual meeting.