Reply from the CEO of BacTech Environmental

Well, that was fast. Only a few hours after I published my post about BacTech Environmental this morning, CEO Ross Orr sent this reply — drafted, he notes, by BacTech’s lawyer.

The requirement [when it comes to requesting an extension for holding an AGM] is that an application be made to the court of competent jurisdiction in order to have a waiver/extension of the meeting prior to the deadline. BacTech did not have the means to hold a meeting and neither of the means to pay for legal counsel to ask for an extension.

It is the reason why Resolution  #3 in under the heading “Past annual general/special meetings” exists (page 9 of the Circular). We also ask for the approval that will allow us to move forward with a court order to authorize the failure to respect the CBCA.

Essentially asks that the shareholders to forgive past sins [sic], and if deemed necessary, proceed to a court order, including:

3. The Shareholders, hereby approved, ratify and adopt all past acts of the board during 2021 2022 and 2023, notwithstanding the failure to hold an annual or special general meeting or hereby consent to an order of a court or such applicable security commission if necessary, outstanding any efficient deficiency of the corporation and compliance with Part XII (shareholders meetings), Part XIII (proxy solicitation) and Part XIV (financial disclosure) of the Canada Business Corporations Act for the financial years end of 2021, 2022 and 2023.

While there are technical flaws in this approach, it is an approach which allows clearing them up without the additional cost for legal fees (prior to the meeting), and asking a court to clarify this. The fact that, as a reporting issuer, BacTech has continued to respect its obligations for continuous disclosure, including the filing of financial statements would, in our view, allow a court to proceed with such an order upon our application.

So, the company did not ask the Court for an extension for calling an annual meeting for the same reason it did not hold an annual general meeting: “cost.”

I can appreciate the need to keep the purse strings tight. This is a relatively small company, with a market cap of less than $10 million CAD, trying to do some technically very difficult projects. Still, I wonder if what prevented the company from holding an AGM was not lack of resources so much as lack of resourcefulness — or maybe disordered priorities. I like to think that a company can be both scrappy and responsibly governed.

While I can’t set aside all my initial concerns, I am impressed by the promptness of the reply and its elements of candor (e.g., “past sins,” “technical flaws”). Now to sit down again with the management circular and ballot, and reconsider.

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Rio Tinto Has Already Botched CEO Stausholm’s Exit

The papers this morning all seem to be telling the same story about the announcement that Rio Tinto CEO Jakob Stausholm will be stepping down from his position by fall of this year. The move is “unexpected,” according to the Financial Times, a “surprise exit.” The editors at mining.com opted for “shock exit;” the Wall Street Journal calls it a “surprise departure.” Shares tumbled in London on the news.

Berenberg analyst Richard Hatch appears to be one of the people driving this narrative. Nearly all the headline writers are working from what he had to say:

This news comes as a big surprise, and in our view was not expected.

We had expected Mr Stausholm to remain with the company and drive the integration of the lithium business, so his exit comes as a surprise.

No clear reason for his departure has been given by the company other than to state that now is ‘a natural moment’ to appoint a successor – but it does not feel that natural to us.

Hatch has not backed off his Buy rating, indicating, I suppose, that he doesn’t think the big surprise of Stausholm’s unexpected exit or Stausholm’s unnatural exit itself will affect long term prospects. Fair enough.

But clearly something is amiss.

Two possibilities present themselves. One, the company seriously bungled the rollout of Stausholm’s departure, surprising and shocking analysts and investors. The failure to set and manage expectations would indicate internal coordination problems. Or, two, Stausholm’s surprise departure signals board intervention over some as yet undisclosed misstep, conflict, or business failure. But what that might be is not yet clear. Perhaps another shoe is going to drop.

The first possibility is charitable, the second a little more cynical. The two are not mutually exclusive. Stausholm could be stepping down for as yet undisclosed reasons and the company could be doing a bad job of handling that. No matter: this is hardly a model of orderly succession planning. It’s a botch, and shareholders would be right to ask whether it indicates other organizational and governance problems.

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