Dominion Diamond investors urge it use cash for buybacks
By Nicole Mordant
Dec 30 (Reuters) - Dominion Diamond Corp, a Canadian miner targeted by activist investors unhappy with its management, should use its cash to buy back stock, two shareholders with significant stakes said on Wednesday.
The shareholders, who asked not to be named but together own nearly 3 percent of Dominion, said the Yellowknife, Northwest Territories-headquartered company could use some of its nearly $300 million in net cash for a buyback. The stock has fallen by nearly 60 percent since May.
The cash pile is equal to about 35 percent of Dominion's market value. The miner also has nearly $250 million worth of diamond inventory and is virtually debt-free.
"The allocation of capital has been non-existent," said one of the shareholders.
Dominion was not immediately available to comment on the shareholder concerns.
A group of investors led by Toronto-based K2 & Associates said in a regulatory filing on Dec 21 that they had requested a meeting with Dominion's independent directors as the company's "share price has suffered excessively and unnecessarily as a result of misguided policies and missed opportunities."
One of the shareholders who urged Dominion on Wednesday to buy back stock is part of that group while the other is not.
A source familiar with the matter last week said the K2 group plans to ask for several seats on Dominion's board and will try to put forward its own slate of directors if it cannot oust the miner's chairman and its chief executive. Continued...