Leading Independent Proxy Advisor ISS Recommends Sherritt Shareholders Vote FOR All Resolutions and Director Nominees

Sherritt International is urging shareholders to vote for all resolutions and director nominees at the upcoming annual meeting, countering a campaign by SC2 Inc., an affiliate of a supplier to Sherritt's Moa Joint Venture. Sherritt's board claims SC2's actions are self-interested, lacking a credible plan or premium, and risk the company's financial stability, further noting that proxy advisors ISS and Glass Lewis recommend voting FOR all resolutions. The company alleges SC2's agreement with a third party limits its upside on nearly 75% of its Sherritt shares, demonstrating a short-term commitment misaligned with the broader shareholder base.

Analysis

Sherritt International Corporation (TSX:S) is currently engaged in a significant proxy contest initiated by shareholder SC2 Inc., an affiliate of Moa Joint Venture (JV) supplier Seablinc Canada Inc. Sherritt's Board strongly refutes SC2's attempt to gain control, asserting that SC2 lacks a credible plan, is not offering a premium, and its actions primarily serve Seablinc's commercial interests to secure a more favorable supplier arrangement, thereby risking Sherritt's financial stability and strategic goals. This defensive stance is notably supported by recommendations from two leading independent proxy advisory firms, Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co. LLC, both advising shareholders to vote FOR all of Sherritt's resolutions and director nominees. A critical point raised by Sherritt is an agreement SC2 entered into with a third party, granting an irrevocable option for the acquisition of up to 30,000,000 of SC2's Sherritt shares (nearly 75% of its holding) at a fixed price of $0.17 per share between August 1, 2025, and May 1, 2026. Sherritt interprets this as evidence of SC2's short-term, opportunistic approach, suggesting SC2 has effectively limited its own upside to gain influence, misaligning its interests with those of long-term shareholders. This governance challenge occurs as Sherritt, a key producer of nickel and cobalt critical for the energy transition, progresses with an expansion program at its Moa JV aimed at increasing annual production by 20%.

Key Decisions for Investors

• Investors should accord significant weight to the unanimous recommendations from leading proxy advisory firms ISS and Glass Lewis, both of which support Sherritt's current board and resolutions.
• Carefully evaluate the implications of SC2 Inc.'s financial arrangement, specifically the option agreement capping its upside on a substantial portion of its shares at $0.17, as this may indicate motives beyond maximizing shareholder value for all investors, such as prioritizing Seablinc's supplier contract terms.
• Monitor the outcome of the Annual and Special Meeting of Shareholders, with the proxy voting deadline on June 6, 2025, as its results will directly impact the company's board composition and strategic continuity, particularly concerning the Moa JV expansion and operations in critical metals.
• Consider the potential risks to Sherritt's financial stability and strategic execution, including its Moa JV expansion and Power division performance, should SC2's campaign succeed without a clearly articulated and credible plan for value creation.