July 18, 2018 / 7:20 PM / a year ago

Detour Gold and Paulson trade barbs over hedge fund's campaign

(Reuters) - Canadian miner Detour Gold and activist investor Paulson & Co entered into an increasingly heated public exchange on Wednesday over the hedge fund’s campaign to seek change at the company and a possible merger approach.

FILE PHOTO: Hedge Fund manager John Paulson attends the men's singles final match between Roger Federer of Switzerland and Novak Djokovic of Serbia at the U.S. Open Championships tennis tournament in New York, NY, U.S. on September 13, 2015. REUTERS/Mike Segar/File Photo

Detour said it had asked the Ontario Securities Commission (OSC) to investigate Paulson, accusing it of “concerning and unlawful behavior.” Paulson called the accusations “false and misleading.”

The hedge fund, run by billionaire John Paulson, has threatened to replace the company’s board if it does not successfully explore strategic alternatives, including a sale, and look for a new chief executive. It owns 5.4 percent of Detour Gold.

Earlier on Wednesday, Paulson & Co issued a statement saying Detour Gold had received a buyout offer from another gold miner, but had failed to disclose it publicly. That sparked a 13 percent rise in Detour’s shares.

Paulson said it was informed of the offer in an unsolicited letter by the company’s interim CEO last week.

In response, Detour Gold said it had not received any offer and did not have a sale process in place.

“Detour Gold Corporation notified the Ontario Securities Commission of concerning and unlawful behavior undertaken by Paulson & Co and has asked the OSC to investigate,” the company said in a statement. It said it had filed the complaint before the hedge fund released Wednesday’s statement.

Detour added that it believed Paulson & Co’s actions constituted “serious misconduct” under securities laws and said Paulson’s possession of non-public information was due to its own actions.

In a further statement issued later on Wednesday, Paulson & Co said that Detour Gold’s statement was “false and misleading.”

“We were in contact with the OSC prior to the issuance of our press release from earlier today and provided it with the unsolicited written communication”, the hedge fund said, adding that it will support any probe by the regulator.

Reporting by Anirban Paul, Nivedita Balu and Kanishka Singh in Bengaluru; Editing by Anil D'Silva and Rosalba O'Brien

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