TORONTO (miningweekly.com) – The Ontario Securities Commission (OSC) has accused former Baffinland Iron Mines consultant Jowdat Waheed and business partner Bruce Walter of using insider information to mount a hostile bid for the company in 2010.
According to the regulator, Waheed acquired material inside information both during his time as a consultant to the company in the first half of 2010, as well as after, which he allegedly used to make a bid for the then TSX-listed firm with Walter in September that year.
“Waheed, Walter acted contrary to the public interest by using material facts and confidential information belonging to Baffinland to purchase a toehold and launch a hostile take-over bid which put Baffinland in play,” the OSC said.
“While a consultant, Waheed did not always act in the best interests of Baffinland,” the commission added.
“[He] at times acted on behalf of Baffinland’s majority shareholder, Resource Capital Fund (RCF) and/or in his own self interest.”
Jowdat was CEO of Nunavut Iron Acquisition Company, which bid $0.80 a share for Baffinland, while Walter was chairperson. The hostile bidder was backed by a Texas fund.
ArcelorMittal then made a friendly bid for the company, and a protracted takeover battle ensued between the world’s biggest steelmaker and Nunavut Iron. Ultimately, the two decided to team up and make a joint bid for Baffinland.
The OSC alleged in an 18-page document that Waheed approached Walter about a possible deal in July 2010.
“Over drinks in the backyard, Waheed told Walter information respecting Baffinland that led Walter to become interested in doing a possible transaction involving Baffinland despite the fact that he had previously been aware of the Mary River Project but it had not interested him,” the commission said.
Nunavut Iron, which has changed its name to WW Mines issued a statement late on Monday afternoon denying any wrongdoing on the part of Walter and Waheed.
“It is regrettable that OSC staff chose to commence proceedings before the commission concerning this matter. The company strongly believes the allegations made by staff are completely without merit and will not withstand scrutiny by a hearing panel of commissioners,” it said, adding they would “vigorously” defend the proceeding.
A hearing has been set for February 15. None of the OSC’s allegations have been proven.
As part of its notice of hearing, the OSC said it is seeking to block Walter and Waheed from trading any shares, that they resign all positions that they hold as a director or officer of any issuer, registrant, or investment fund manager, and that they be prohibited from becoming or acting as a director or officer of any issuer, registrant, or investment fund manager, among other things.
Baffinland owns the giant Mary River iron-ore project on Baffin Island, where the company hopes to build the world's most northerly producer of the steelmaking ingredient.
Edited by: Creamer Media Reporter
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