Monday, July 28, 2008

Melnyk drops challenge in Biovail board election

Melnyk drops challenge in Biovail board electionBiovail 3-month TSX chart

Eugene Melnyk is dropping his attempt to get his slate of directors elected to the board of Biovail Corp.

Melnyk announced Monday he and his supporters will not contest the board election when the Toronto-based pharmaceutical company's annual meeting is reconvened on Aug. 8.

Investors sent shares of Biovail down more than 10 per cent, or $1.21, to close at $10.05 on the TSX following the announcement.

An Ontario Supreme Court judge on July 16 ordered Biovail to reconvene its annual meeting so investors could vote again on a board of directors. Justice Herman Siegel gave the company a maximum of 90 days from the original June 25 meeting to hold a new vote.

At the company's June meeting, Melnyk, Biovail's founder and former top executive, and his backers withdrew their votes from the board election, leaving less than 51 per cent of the shares outstanding represented. Melnyk had proposed his own dissident slate of directors.

Melnyk's representatives walked out of the meeting after the directors passed a bylaw saying that only 25 per cent of the stock was needed for a quorum.

After the bylaw was passed, 97.6 per cent of the votes cast at the meeting backed the management slate of directors, but that was after Melnyk's supporters withdrew their proxies.

Melynk said Monday that the court reaffirmed the April 28 record date for shareholders voting at the upcoming meeting. He had been seeking a new record date, stating that almost 90 million Biovail shares have traded since the date of record.

"Largely as a result of this, I have determined that it is in everyone's best interest — particularly the shareholders of Biovail — to let Doug Squires, Bill Wells and their management move forward with their plan," Melynk said in a statement.

Melnyk holds about 12 per cent of Biovail's shares. He had launched his campaign to get a dissident slate of directors elected after complaining about the performance of current Biovail management.

Melnyk said he will now go ahead with a new private company, Trimel Biopharma. Bruce Brydon, a former Biovail CEO, will lead the new company.

Melnyk is also the owner of the NHL Ottawa Senators.

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