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Bristol Responds To Jaguar Mining Regarding Payments To Directors And Comments On Recent Glass Lewis And ISS Reports

Stocks in this article: JAG

DARIEN, Conn., June 25, 2012 /PRNewswire/ -- Bristol Investment Partners, LLC (together with its affiliates, " Bristol"), the largest shareholder of Jaguar Mining Inc. ("Jaguar" or the "Company") (JAG:TSX/NYSE) with current ownership of approximately 8.6% of the outstanding common shares, today issued the following statement responding to Jaguar with regard to Bristol's estimate of the total payments made to Directors during the Company's recent strategic review process.  In its statement, Bristol also commented on, among other things, the recent reports issued by Institutional Shareholder Services Inc. ("ISS") and Glass Lewis & Co., LLC ("Glass Lewis" ) in connection with Jaguar's Annual General Meeting scheduled to be held on June 29, 2012 (the "AGM"). 

"We are pleased with the overwhelming response we have received from Jaguar shareholders following our June 13, 2012 letter to the Jaguar Board in which we set forth a detailed narrative of the reasons we will withhold 100% of our share votes against the reelection of Gary German, Gil Clausen and John Andrews (the "Lead Directors") to the Jaguar Board at the upcoming Annual General Meeting ("AGM").  It is clear many Jaguar shareholders are outraged by the performance of the Lead Directors and are energized to embrace a platform to hold the Lead Directors accountable for the destruction of shareholder value suffered under their watch. 

It is unfortunate that the Lead Directors have chosen to spend precious Jaguar resources on proxy-solicitation and legal fees in an attempt to deflect shareholder scrutiny away from their epic misjudgments to far less relevant issues, such as Bristol's estimate of payments made to the Lead Directors during the past six months.  To be clear, Bristol developed its estimate of total payments made to the Lead Directors based on information collected during a June 11 conference call with Jaguar Chief Financial Officer Jim Roller and Jaguar Investor Relations Officer Roger Hendriksen.  During this call, Mr. Roller noted that Bristol's methodology in estimating total costs for the strategic review process was reasonable.

Bristol views payments to directors as including retainers, fees, meeting-attendance fees, salaries, and all reimbursed business and travel expenses.  Bristol is unsure exactly what subset of "payments to directors" the Board specifically calculated in the $203,187.50 figure Mr. German submitted to Bristol on June 21, but we believe a more productive juncture to share such detail would have been during Bristol's conference call with Jaguar's Chief Financial Officer on June 11.  Bristol has no intention of amending its Schedule 13D in any manner and maintains that it has a reasonable basis for all statements it has made to date regarding the strategic review process.

We are extremely gratified that Glass Lewis, one of the leading independent proxy advisory firms, echoed many of our concerns with the failed strategic review.  Notably, in its report Glass Lewis stated, "After review, we believe that shareholders should be troubled by the complaints brought forth by Bristol, as they certainly raise questions regarding the board's ability to act in shareholders' best interests. The erosion of shareholder value since a deal failed to materialize has been enormous and we believe that Bristol makes a rather compelling case regarding what it views as a failure of the board to see a deal through ."

Glass Lewis further stated, "Any time a company's largest investor publicly comes out with allegations of mismanagement, we believe that all shareholders should closely examine the board's actions, particularly given the dramatic decline in shareholder value that has occurred. In addition, we find the board's response to Bristol lacking and would expect better disclosure as to why Shandong's requirements were so unappealing so as to prevent a deal from moving forward."

While the ultimate recommendations reached by ISS and Glass Lewis follow the traditional path of "benefit of the doubt" to directors, Bristol believes all investors would expect their investment management companies to conduct a thorough and proprietary review of Bristol's concerns, especially since Jaguar's 2012 year-to-date share-price performance differs so dramatically from the performance of all broad-based gold share indices.

Bristol applauds the decision of Jaguar directors finally to relinquish their conflicting Cliff SARs, belying their recognition that serious conflicts of interest existed during the strategic review.  Glass Lewis validates our concerns regarding the Cliff SARs in its report, stating, "In our view, these SARs do not serve to align the interests of the board with those of shareholders and in fact, most likely achieve the opposite. We also find it difficult to believe the board's statement that the SARs were never considered. As disclosed in the Company's circular, the aggregate payout from the SARs to the board in the event of a change in control [at US $10.00] would total $2,325,307 and nothing for a deal at a price below that."

Bristol is also troubled by the Board's mischaracterization to ISS staff that the Board had offered "to grant Bristol full details of the strategic process," and that this offer was rejected by Bristol. The truth is the Company attempted to force Bristol into entering an effective "standstill" on all Jaguar trading for a period of up to six months, in exchange merely for an explanation, just days before announcing the conclusion of the strategic review, as to why the Board had failed to meet two stipulated deadlines ( April 27 and May 2) to provide written answers to Bristol's stated concerns in its April 20, 2012 private letter. 

All in all, in light of the failed strategic review and resulting destruction of shareholder value, it would be difficult for anyone to argue that the Lead Directors have acted in the best interest of Jaguar shareholders. With the AGM fewer than five days away, we would like to remind all shareholders that they still have time to vote their common shares to 'withhold' against the Lead Directors. We view the election of directors at the AGM as a referendum on the performance of the Lead Directors, and we believe the recent price-performance of Jaguar shares speaks for itself."

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