Setback for Paulson in Algoma Fight

TORONTO (HedgeWorld.com)--A judge in the Superior Court of Justice of Ontario denied a request from the New York-based hedge fund manager Paulson & Co. Inc. to order that Canadian steel company Algoma hold its special meeting of shareholders on Feb. 22.

This ruling, by Judge Peter A. Cumming, leaves the shareholders' meeting set for March 22.

"The scheduling of a requisitioned meeting is left to the business judgment of the directors to be determined by them acting honestly, in good faith and with a view to the best interests of the corporation," Judge Cumming wrote. He added that he is willing to defer to the directors within a range of reasonableness, and that the difference in "a mere 28 days" added to the schedule doesn't fall outside that range.

Paulson first requisitioned the meeting in November. Reacting to the judge's decision Monday [Jan. 9], Michael Waldorf, vice president and senior counsel for Paulson & Co., said that Paulson looks forward to giving the shareholders the opportunity to elect new directors and to advise the board on important business matters.

"While we at Paulson think it's unfortunate that the Algoma management has forced their shareholders to wait five months from a meeting request," he added, "we are confident shareholders will support our nominees."

On a separate legal issue, Mr. Waldorf commented on the lawsuit by the United Steelworkers union, which seeks to block the meeting. "Paulson, like any 5% shareholder, has the right under Canadian law to request a shareholder meeting, and the company is legally obligated to hold one. The union has no right to interfere with a shareholder meeting."

A different judge, in Sault Ste. Marie, Ontario, will hold a hearing on the union's action Jan. 12.

CFaille@HedgeWorld.com

Contact Bob Keane with questions or comments at bkeane@investmentadvisor.com.

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