At the June 23, 2003, closing Norilsk Nickel and Stillwater also entered into a Stockholders Agreement which establishes certain corporate governance principles for Stillwater and restricts the ability of Norilsk Nickel and its affiliates to acquire more shares of Stillwater.
Creation of an Independent Board of Directors
The Stockholders Agreement provides that at all times a majority of the directors on the Board must meet certain independence requirements, including the independence requirements of the New York Stock Exchange. Upon the appointment of a new independent director, the existing independent directors must make an affirmative determination that such new director has no prior material relationship with Stillwater or Norilsk Nickel. To insure that the interests of Stillwater's public stockholders are appropriately represented on the Board, three directors will be nominated independently of Norilsk Nickel, and a majority of these so-called "public directors" must approve all related party transactions with Norilsk Nickel and its affiliates.
Strengthening Stillwater's Financial Condition
The global economic downturn beginning in early 2001 and the events of September 11, 2001 precipitated a steep and unexpected decline in commodities prices, including the prices of palladium, causing a sharp decline in Stillwater's financial condition. Through its investment in Stillwater, Norilsk Nickel was able to provide much needed capital to Stillwater, thereby strengthening Stillwater's financial condition. The cash portion of Norilsk Nickel's investment has been used by Stillwater to pay down $50 million of bank debt. The increased liquidity from the transaction will permit Stillwater to conduct its operations with a view to cost-effective, profitable mining and marketing activities.
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