Ont. grain handler moves to fend off P+H bid

A Great Lakes grain handler and mustard miller is reportedly set to sell the "crown jewel" of its assets to help fend off a takeover bid by Winnipeg grain firm Parrish and Heimbecker.

P+H, which already holds 28 per cent and two seats on the board of directors of Goderich, Ont.-based Thirdcoast Ltd., accused the company’s other directors and management Tuesday of trying to "frustrate Thirdcoast shareholders’ right to decide for themselves" on P+H’s cash bid of $155 per share.

Those efforts, P+H alleged, include Thirdcoast’s move last month to put up a "shareholders’ rights plan" or "poison pill" — a tactic in which the target of a takeover threatens to release a flood of cheap new shares if an unasked-for bidder builds his or her stake past a certain percentage.

In this case, the poison pill would be triggered if P+H buys any more Thirdcoast shares or if anyone else buys up a stake of 20 per cent or more.

P+H also said Tuesday it’s been "formally advised" of a plan by Thirdcoast’s management and other directors to sell Thirdcoast’s Goderich grain terminal to another buyer by as early as July 3. The current deadline for shareholders to tender to P+H’s offer is July 5.

Neither the poison pill nor the Goderich sale involved the board or management seeking approval from Thirdcoast shareholders or making any public announcement of their plans, P+H said.

In a June 15 circular to shareholders, Thirdcoast’s "independent" (that is, non-P+H) board members said they were not yet making a recommendation on accepting or rejecting P+H’s offer, but advised shareholders not to tender to the bid until further notice.

The board, in its circular, said it’s "currently exploring strategic alternatives available to the company, including discussions with potential buyers, which could result in a superior proposal."

P+H has already sweetened its bid for Thirdcoast once, from $115 in March to $155 in May, based on an independent valuation of Thirdcoast by National Bank Financial. Thirdcoast’s board, in its circular, criticized NBF’s valuation as "very conservative."

P+H has asked for and received a hearing on July 4 before the Ontario Securities Commission (OSC), where the Winnipeg firm will apply for a cease-trade order against Thirdcoast’s poison pill.

P+H said it has now also applied to the Ontario Superior Court of Justice for an injunction to prevent the sale of the Goderich terminal.

The Winnipeg company also accused Thirdcoast’s committee of directors of approving "hugely above-market salaries" for management, up 70 per cent in fiscal 2012 over 2011, and of approving "exceedingly rich change-in-control severance payments" for certain executives.

P+H said Tuesday it believes the independent directors intend "to commit Thirdcoast to a binding agreement that could cause P+H to withdraw the bid due to the sale of the Goderich terminal, and thereby do an end-run around the OSC’s hearing" on Thirdcoast’s poison pill.

"In short, P+H believes that an asset sale… one day before the OSC hearing to consider the rights plan, is designed to circumvent the OSC’s authority over the takeover bid process and thwart the bid before securities regulators have even had an opportunity to address the committee of directors’ inappropriate conduct."

Apart from its Goderich terminal, Thirdcoast owns grain handling, processing and storage facilities at Hamilton and Port Colborne, Ont. and also mills Prairie-grown mustard seed at Hamilton.

Thirdcoast noted last year that its grain handling operations were coming under direct pressure from P+H’s own new grain terminal at Hamilton, which opened in the fall of 2010.

Related stories:
P+H to boost bid for Ont. grain handler, May 29, 2012
P+H to make play for Great Lakes grain handler, March 6, 2012

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