Canadian auto parts maker Martinrea faces proxy battle
By Nicole Mordant
(Reuters) - A former executive of Martinrea International Inc intends to ask shareholders to replace a majority of the directors at the Canadian auto parts maker, accusing the board of a lack of independence and industry experience.
Rea Holdings, a Toronto-based holding company controlled by Nat Rea, a former president and deputy chairman of Martinrea, said on Thursday it intends to propose five nominees for election to the board, setting the stage for a proxy battle.
Rea, who sold his auto parts company, Rea International, in 2002 to what is now Martinrea, has been critical of the leadership of the Vaughan, Ontario-based company for some time. According to Martinrea, "his employment was terminated" in 2012.
Last September Rea and Rea Holdings brought a lawsuit against some Martinrea officials and directors alleging that they breached their fiduciary duties regarding some payments to suppliers and customers. The company has rejected the allegations and counter-sued.
"The incumbent board and management of Martinrea is deeply entrenched, with recent additions of individuals chosen to provide the appearance of board renewal," Rea Holdings said in a news release on Thursday.
Rea Holdings also said Martinrea's balance sheet is stretched and accused the company of a "pattern of serious operational issues."
A representative from Martinrea could not be reached for comment.
Shares of Martinrea have underperformed rivals such as Magna International Inc and Linamar Corp over the last two years at a time when the auto sector in North America has been recovering as the economy improves. Continued...