Maple Leaf Foods Inc.’s board of directors said, however, they approved changes to further enhance the company's governance structure, which include a new governance agreement with McCain and McCain Capital Corporation, the company's largest shareholder, and the adoption of a shareholder rights plan.
The special committee was created to make recommendations to the board on action to be taken by the company, if any, in connection with a proposed reorganization transaction of MCC and the adoption of a shareholder rights plan. This committee consists of all company directors independent of McCain and MCC.
The governance agreement with MCC, which currently holds approximately 31.3 percent of the company's common shares outstanding, and McCain was precipitated by a proposed reorganization transaction involving MCC that the company understands will result in McCain acquiring all of the shares in Maple Leaf Foods currently held by MCC. Upon completion of that transaction, the company understands McCain will beneficially own or control 44,673,922 common shares of the company, or approximately 31.9 percent of the total shares outstanding.
Under the governance agreement, MCC, and upon completion of the re-organization, McCain will have the right to nominate a number of directors of the company proportionate to its or his ownership interest in the company. Based on the current board size of 13, MCC or McCain would be entitled to nominate four directors. All other directors on the board, other than one director who is affiliated with West Face Capital Inc., will, except in certain circumstances, be directors independent of management, McCain, MCC and West Face Capital.
Maple Leaf’s board of directors also voted to adopt a rights plan, which contains customary market terms for a rights plan and includes several provisions recommended as best practice by various governance organizations. It follows a previous plan that expired on Dec. 29, 2010.
The rights plan was adopted to allow the board of directors and company shareholders sufficient time to consider fully any transaction involving the acquisition or proposed acquisition of 20 percent or more of the outstanding common shares of the company. The plan allows the board of directors time to consider all alternatives and to ensure the fair treatment of shareholders should any such transaction be initiated.
Effective immediately, the rights plan will expire on the six-month anniversary of its adoption should shareholder approval of the rights plan not be obtained prior to that time. The company intends to call and hold a special meeting of shareholders to approve the rights plan within six months.
A material change report and the full text of the governance agreement and the rights plan will be available at www.sedar.com.