EXHIBIT 7.16
MARCH 6, 2012 SHAREHOLDER LETTER
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 9)*
| BAJA MINING CORP. |
| (Name of Issuer) |
| Common Shares, Without Par Value |
| (Title of Class of Securities) |
| 05709R103 |
| (CUSIP Number) |
| with a copy to: | |
| Mr. Jonathan Fiorello | Robert G. Minion, Esq. |
| Mount Kellett Capital Management LP | Lowenstein Sandler PC |
| 623 Fifth Avenue, 18th Floor | 1251 Avenue of the Americas, 18th Floor |
| New York, NY 10022 | New York, NY 10020 |
| (212) 588-6100 | (646) 414-6930 |
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
| March 6, 2012 |
| (Date of Event which Requires Filing of this Statement) |
If the filing person has previously filed a statement on Schedule l3G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨
Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
| Cusip No. | 05709R103 | |
| 1. | Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only): | |
| Mount Kellett Capital Management LP | ||
| 2. | Check the Appropriate Box if a Member of a Group (See Instructions): | |
| (a) | ||
| (b) | ||
| 3. | SEC Use Only | |
| 4. | Source of Funds (See Instructions): WC | |
| 5. | Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e): | |
| Not Applicable | ||
| 6. | Citizenship or Place of Organization: State of Delaware | |
| Number of | 7. | Sole Voting Power: | 67,421,117* | ||
| Shares Beneficially | 8. | Shared Voting Power: | 0* | ||
| Owned by | |||||
| Each Reporting | 9. | Sole Dispositive Power: | 67,421,117* | ||
| Person With | 10. | Shared Dispositive Power: | 0* |
| 11. | Aggregate Amount Beneficially Owned by Each Reporting Person: | 67,421,117* | ||
| 12. | Check if the Aggregate Amount in Row (11) Excludes Certain Shares | |||
| (See Instructions): Not Applicable | ||||
| 13. | Percent of Class Represented by Amount in Row (11): | 19.9%* | ||
| 14. | Type of Reporting Person (See Instructions): IA | |||
*As of March 8, 2012 (the “Filing Date”), Mount Kellett Master Fund II-A, L.P., a Cayman Islands exempted limited partnership (the “Fund”), holds 67,421,117 common shares, without par value (the “Common Shares”), of Baja Mining Corp., incorporated under the laws of the Province of British Columbia, Canada (the “Company”). Mount Kellett Capital Management LP (the “Reporting Person”) possesses the sole power to vote and the sole power to direct the disposition of all securities of the Company held by the Fund. Based on the Company’s Report of Foreign Private Issuer for the Month of February 2012, filed on Form 6-K with the United States Securities and Exchange Commission, as of February 3, 2012, there were 339,563,275 issued and outstanding Common Shares. Thus, for the purposes of Rule 13d-3 under the Securities Exchange Act of 1934 (the “Act”), the Reporting Person is deemed to beneficially own 19.9% of the Common Shares issued and outstanding as of the Filing Date. In addition to the Common Shares held by the Fund and deemed beneficially owned by the Reporting Person, a senior executive employed by the Reporting Person (the “Senior Executive Employee”) holds 40,000 Common Shares. Pursuant to Rule 13d-4 under the Act, the Reporting Person disclaims the beneficial ownership of any Common Shares held by the Senior Executive Employee.
| -2- |
| Item 4. | Purpose of Transaction. |
Item 4 is hereby amended by adding the following after the twentieth paragraph thereof:
On March 6, 2012, the Reporting Person, on behalf of the Fund, issued a press release, a copy of which is attached to this Schedule 13D, as amended, as Exhibit 7.15. The press release, among other things, contained a letter to the Company’s shareholders urging them to protect their investment in the Company by voting for the two new independent shareholder nominees to the Company’s board of directors. The shareholder letter has been posted to www.ShareholdersForBaja.com and is attached to this Schedule 13D, as amended, as Exhibit 7.16.
Also on March 6, 2012, the Reporting Person, on behalf of the Fund, issued a press release, a copy of which is attached to this Schedule 13D, as amended, as Exhibit 7.17. The press release, among other things, comments on the British Columbia Securities Commission’s decision not to pursue a complaint filed by the Company on February 23, 2012.
The description of the press releases and shareholder letter set forth above are qualified in their entirety by reference to the complete copies of the respective documents that are attached to this Schedule 13D, as amended, as exhibits pursuant to Item 7 hereof.
| Item 7. | Material to be Filed as Exhibits. |
Item 7 is hereby amended by adding the following after the fourteenth paragraph thereof:
7.15 Press Release, dated March 6, 2012, from the Reporting Person, on behalf of the Fund.
7.16 Shareholder Letter, dated March 6, 2012, from the Reporting Person, on behalf of the Fund.
7.17 Press Release, dated March 6, 2012, from the Reporting Person, on behalf of the Fund.
[signature follows on the next page]
| -3- |
Signature
After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
| March 8, 2012 | ||||
| MOUNT KELLETT CAPITAL MANAGEMENT LP | ||||
| By: | Mount Kellett Capital Management GP LLC, | |||
| its general partner | ||||
| By: | /s/ Jonathan Fiorello | |||
| Jonathan Fiorello | ||||
| Chief Operating Officer | ||||
Attention: Intentional misstatements or omissions of fact constitute Federal criminal violations (See 18 U.S.C. 1001).
| -4- |
EXHIBIT 7.15
MARCH 6, 2012 PRESS RELEASE
BAJA MINING SHAREHOLDERS ARE URGED TO ACT NOW
TO PROTECT THEIR INVESTMENT
Elect Directors Truly Independent From Management And Who Will Act In The Best Interest Of All Shareholders
Mount Kellett Recommends Baja Shareholders Vote For Independent Nominees Lehner And Waisberg On Your BLUE Proxy Card
Vancouver, British Columbia, March 6, 2012 – Mount Kellett Capital Management LP (“Mount Kellett”), today sent a letter to fellow shareholders of Baja Mining Corp. (TSX:BAJ) (OTCQX: BAJFF) (“Baja” or the “company”), urging them to act now to protect their investment in Baja. Mount Kellett has nominated two independent nominees for election to the Baja board at the Special Meeting of Shareholders to be held on April 3, 2012. For more information on how to vote your BLUE proxy, as well as access to other important materials, please visit www.ShareholdersForBaja.com.
Mount Kellett Chief Operating Officer Jonathan Fiorello said, “The board that was responsible for the Boleo project is not the one that serves today. Instead, shareholders have a board that is not independent and is preoccupied with its own self-interest and self dealing. Without immediate change to the board through the election of both independent shareholder nominees, the risk of value destruction at Baja is great whether through ill-conceived or self-interested transactions and financings or through unwarranted personal enrichment. We urge Baja shareholders to take action and have their voices heard.”
The full text of the letter follows:
THE TIME TO ACT IS NOW: PROTECT YOUR INVESTMENT IN BAJA
ELECT DIRECTORS TRULY INDEPENDENT FROM MANAGEMENT
AND WHO WILL ACT IN YOUR BEST INTEREST
VOTE FOR INDEPENDENT NOMINEES LEHNER AND WAISBERG
ON YOUR BLUE PROXY CARD
Dear Fellow Shareholders:
The April 3, 2012 Special Meeting is critical for Baja shareholders. Baja’s shareholders urgently need independent oversight of the management and board to stop the self-dealing we have exposed, focus the company on bringing the Boleo project online and maintain attention on the ongoing creation of shareholder value.
We are writing to urge you to vote your BLUE proxy card to elect Mr. Stephen Lehner and Mr. Lorie Waisberg, two highly qualified, independent candidates, to the Baja board of directors. Once elected, Messrs. Lehner and Waisberg will represent a minority of the board and will work with the other directors to provide much-needed independent oversight and an owner-driven mindset.
Without immediate change, the risk of value destruction at Baja is great whether through ill-conceived or self-interested transactions and financings or through unwarranted personal enrichment. Baja shareholders can realize considerable value from the Boleo project only if truly independent directors are in place to act in the interest of all shareholders.
This Board Is Not The Board That Drove Baja’s Success
The board responsible for Baja’s current success is not the one that serves today. In fact, formative board members integral to Baja’s development were displaced by Baja’s CEO, Mr. John Greenslade, after they vehemently objected to Mr. Greenslade moonlighting as CEO of potential competitor, Catalyst Copper. The removed directors felt that our CEO’s involvement with another company, at a full-time salary, was a diversion from his responsibility and fiduciary duty to Baja. Those directors were right. Instead of listening to his board and focusing on Baja full-time, Mr. Greenslade accepted the position as Catalyst CEO. He then took steps to replace the directors that had opposed him.
As a result, Mr. Robert Mouat, a geological engineer and the Boleo project co-founder, and Mr. Ross Glanville, a mining engineer and specialist in the valuation of mining companies and projects with over 35 years of experience, were not nominated for reelection at the Baja Annual General Meeting held in May 2011. Instead, three new directors were hand-picked to stack a majority Greenslade board. These three hand-picked directors are Mr. Gerald Prosalendis, Mr. François Marland, and Mr. Giles Baynham.
THE CURRENT BOARD IS NOT TRULY INDEPENDENT AND IS PREOCCUPIED WITH ITS OWN SELF INTEREST AND SELF DEALING
Following the 2011 Annual General Meeting, the Baja board became unrecognizable from the one that had accomplished so much – yet Messrs. Prosalendis, Marland, and Baynham (the newly appointed board members) were rewarded financially as if they had been associated with the company throughout its development. Just hours after the Annual General Meeting in which shareholders approved a stock option plan that was promoted by Mr. Greenslade as being essential to hire senior management candidates and key personnel, the three new directors were awarded 750,000 options each. Indeed, fully 43% of options intended for executives were granted to Mr. Greenslade and his friends on the board within 30 days of the 2011 shareholders’ meeting.
Even more egregious is the fact that, in a short 18 month period, Messrs. Greenslade, Marland, Baynham, and Prosalendis have awarded one another more than $4,000,000 in options in the aggregate from their respective companies. As you can see, the Baja board has changed and is no longer independent.
What is more, the Company has contemplated a related party transaction with Catalyst, the subject of the original struggle that led Mr. Greenslade to consolidate his control over the Baja board. If pursued, a transaction with Catalyst would benefit certain Baja insiders and directors immensely given that they own 6% of Catalyst – far more than they do of Baja.
THE CURRENT BOARD ONLY ACTS FOR SHAREHOLDERS WHEN FORCED
The pattern for the board since the 2011 Annual General Meeting has been one of self-dealing. Mount Kellett has put a glaring spotlight on the company’s corporate governance policies and questionable compensation practices.
Any corrective measures the Company has undertaken have been in direct response to Mount Kellett publicly raising its concerns. In fact, all of the corrective actions the Baja board has taken over the last few months, including the enforcement of the existing Baja charter that the chair of the board and the composition of the Nominating Committee be independent, amending Baja’s stock option plan to comply with Institutional Shareholder Services (ISS) guidelines, and adopting an anti-nepotism policy (which they nonetheless disregarded), among others, were all made solely in reaction to Mount Kellett’s publicized concerns. However, the actions taken are partial and reversible.
THE CURRENT BOARD CANNOT BE TRUSTED ON ITS OWN
The current board, which includes 6 “independent” board members, has proven itself unwilling to do its duty without shareholder pressure – thereby demonstrating that the current Baja board only practices good governance reactively.
Moreover, the Baja board has left the door wide open for a future transaction with Catalyst – representing a significant related-party transaction. All the “corrective” actions provide ample loopholes to serve self-interest and avoid good governance – this needs to change.
BAJA SHAREHOLDERS NEED TRULY INDEPENDENT
SHAREHOLDER REPRESENTATION
At this critical moment of value creation and realization, the new board has shown only a track record of self-interest that is inconsistent with its fiduciary duty to shareholders. The risk of value destruction is great - whether through ill-conceived or self-interested transactions and financings, or through unwarranted personal enrichment. Shareholders need to act now to protect their investment.
Once elected, Mr. Stephen Lehner and Mr. Lorie Waisberg will work with other directors to ensure that sound corporate governance policies are adopted and adhered to in practice and serve ALL Baja shareholders. Once elected, Mr. Waisberg also commits to resigning one of his other directorships and to limit his membership on board audit committees as prescribed by the major proxy advisory firms.
MOUNT KELLETT IS FIGHTING FOR THE OVERSIGHT THIS BOARD DESPERATELY NEEDS
As previously stated, we are not looking to take over the company, nor interrupt business operations at Baja. Mount Kellett has never commenced a hostile transaction nor pursued a buyout of a public company. In sharp contrast, we are doing all that we can to make sure that Baja and the Boleo project stays on course as planned, so that all shareholders can realize as much value as possible.
To be very clear, contrary to Baja’s assertions, it is not feasible for Mount Kellett to take over the company without a shareholder vote. In addition, Mount Kellett has already offered not to exceed 20% ownership, except in response to a takeover bid by a third party. We also offered to stand down from any action against the Baja board for two years, with the only exception of Mount Kellett’s representatives resigning for issues of governance that it believed should be brought to shareholders. Don’t let Baja mislead you on the issues.
YOUR VOTE IS IMPORTANT - VOTE YOUR BLUE PROXY CARD TODAY
We urge you to support independent shareholder representation. Mount Kellett is seeking to elect two new independent shareholder nominees to ensure the Baja board acts on behalf of all shareholders and remains focused on creating shareholder value.
Please sign, date and return the enclosed BLUE proxy in advance of the proxy voting deadline of March 30, 2012 at 7:00 am (Vancouver Time).
No matter how many shares you own, your vote is very important. If you have any questions and/or need assistance in voting your shares, please call Kingsdale Shareholder Services at 1-888-518-1562 or 1-416-867-2272 (collect calls accepted). For more information please visit www.ShareholdersForBaja.com.
We thank you for your consideration and look forward to your support in working to protect the investments and interests of all Baja shareholders.
Sincerely,
/s/ Jonathan Fiorello
Chief Operating Officer
Mount Kellett Capital Management
About Mount Kellett Capital Management LP
Mount Kellett is a multi-strategy private investment firm focused on global value, special situations and opportunistic investing. The firm has approximately 100 employees with offices in New York, Hong Kong, London, and Mumbai. The firm currently has in excess of $6 billion in assets under management.
Contacts
Kingsdale Communications Inc.
Karen Chodzicki, 416-867-2335
or
Sard Verbinnen & Co
Dan Gagnier / Sarah Brown, 212-687-8080
EXHIBIT 7.16
MARCH 6, 2012 SHAREHOLDER LETTER
EXHIBIT 7.17
MARCH 6, 2012 PRESS RELEASE
MOUNT KELLETT COMMENTS ON BRITISH COLUMBIA
SECURITIES
COMMISSION’S DECISION NOT TO PURSUE BAJA MINING’S COMPLAINT
Vancouver, British Columbia, March 6, 2012 – Mount Kellett Capital Management LP (“Mount Kellett”), today announced that the British Columbia Securities Commission ("BCSC") has decided not to pursue the complaint filed on February 23, 2012, by Baja Mining Corp. (TSX:BAJ) (OTCQX: BAJFF) (“Baja”) against Mount Kellett, citing insufficient evidence.
“We are pleased that the BC Securities Commission has recognized the meritless nature of Baja’s claims,” said Jonathan Fiorello, Chief Operating Officer of Mount Kellett. “These allegations were unfounded and designed to divert the attention of Baja shareholders away from the self-dealing of the Baja board and management.”
Fiorello continued, “Notwithstanding Baja’s attempts to distract its shareholders, Mount Kellett is as committed as ever to our efforts to nominate two highly qualified shareholder nominees to the Baja Board. We look forward to shareholder support at the special shareholders’ meeting on April 3, 2012 and the opportunity for Baja shareholders to have their voices heard.”
About Mount Kellett Capital Management LP
Mount Kellett is a multi-strategy private investment firm focused on global value, special situations and opportunistic investing. The firm has approximately 100 employees with offices in New York, Hong Kong, London, and Mumbai. The firm currently has in excess of $6 billion in assets under management.
Contacts
Kingsdale Communications Inc.
Karen Chodzicki, 416-867-2335
or
Sard Verbinnen & Co
Dan Gagnier / Sarah Brown, 212-687-8080