Investor calls on ‘mismanaged’ Nittetsu Mining to buy back shares

Nittetsu Mining Co. is being urged by a key investor to sell real estate and other non-core assets and use the proceeds to buy back shares.

Continental General Insurance Co. executive chairman Michael Gorzynski warned in a letter to Nittetsu’s board that the investment firm might try to replace directors if its proposals aren’t addressed.

“CGIC’s position should come as no surprise as we have consistently communicated our views regarding the consequences of the company’s mismanagement, overcapitalization, bloated holdings and inability to accelerate the buyback of shares,” Gorzynski said. “Nonetheless, the company’s responses have been persistently slow and lethargic, something long-suffering shareholders can ill afford to continue.”

The firm also wants Nittetsu to commit to a cost reduction program and use at least 50% of its net income to buy back shares.

A representative for Tokyo-based Nittetsu declined to comment.

Nittetsu’s operations include limestone mines in Japan and the Atacama copper mine in Chile, according to its website. Its shares have more than doubled this year, giving it a market value of about 159 billion yen ($1 billion).

CGIC, now a 10% shareholder in Nittetsu, said in the letter dated Dec. 4 that it expects a response to its concerns by the end of the year. Gorzynski, who previously worked at activist investor Third Point, said his firm would be willing to immediately fly its team to Tokyo for a meeting.

CGIC’s stake puts it on par with Nittetsu’s biggest shareholder, which according to data compiled by Bloomberg is Nippon Steel Corp. with almost 10.2%.

(By Liana Baker)