Biovail ordered to reconvene annual meeting; Melnyk to reach out to shareholders

By Lisa Kerner

Charlotte, N.C., July 16 - Biovail Corp. said in accordance with an Ontario Superior Court ruling, the company will reconvene its previously adjourned annual meeting of shareholders "as soon as reasonably possible" given the court's deadline of Sept. 23.

The record date for the meeting remains the same and all proxies voted to date remain valid, according to a Biovail news release.

Former Biovail chief executive officer Eugene Melnyk sought the court order, alleging that Biovail's board met behind closed doors to amend the company's bylaws to reduce the quorum for a meeting after proxies representing 6 million Biovail shares were revoked prior to the June 25 annual meeting.

As a result of the revocation, a quorum of at least 51% of the issued and outstanding shares of common stock would not have been present at the meeting as required under Biovail's bylaws, prior to the amendment, it was previously reported.

Melnyk maintained that the purported amendment did not have the effect of reducing the quorum required.

Biovail, a Toronto biopharmaceutical company, explained that the revocation of the shares was a correction of a clerical error related to an overvote situation by a financial institution.

The Concerned Shareholders of Biovail group, led by Melnyk, is seeking the election of a dissident slate of 10 nominees to the Biovail board, including another former Biovail chief executive officer, Bruce D. Brydon.

In a statement from the shareholder group on Wednesday, Melnyk noted that Biovail shareholders who haven't yet voted may do so and that shareholders who have voted may change their votes.

"Biovail regrets the delay, inconvenience, and expense that Mr. Melnyk's actions have caused for other shareholders," chairman of the board Douglas Squires said in a company news release.

"Before Mr. Melnyk revoked his proxies just prior to the start of the June 25 meeting, the Biovail nominees to the board had won the support of approximately 87% of the shares represented by proxy at the meeting, other than shares controlled by Mr. Melnyk and his associated trusts," Squires noted.

In the statement from the Concerned Shareholders, Brydon said a majority of Biovail shareholders did not cast their votes and the status of the vote was much closer than Biovail indicated.

A swing of approximately 9 million votes, or less than 6% of Biovail's issued and outstanding shares, would have resulted in the election of the Concerned Shareholders' nominees on June 25, Brydon added.

Brydon and Melnyk said they plan to reach out to Biovail shareholders in the coming weeks to implement their plan through Biovail, it their nominees are elected, or through their new company, Trimel Biopharma if the shareholder group is unsuccessful at the reconvened meeting.

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