Biovail urges shareholder support for board slate

(In U.S. dollars unless noted)

By Susan Taylor

OTTAWA, May 16 (Reuters) - Biovail Corp (BVF.TO: Quote, Profile, Research) is urging shareholders to support its proposed board of directors and a "new direction" for the company, while rejecting any dissidents that founder Eugene Melnyk may nominate.

The Canadian drug company, which recently named a new chief executive and outlined its business strategy, is embroiled in a messy battle with Melnyk, who has said he will propose an alternative slate of directors at the June 25 annual meeting in Toronto.

Biovail is proposing five new directors to its 10-member board, it said in a proxy circular filed on Friday with regulators.

Melnyk, the company's biggest shareholder with about 12 percent of its stock, has decried Biovail's financial performance since stepping down as director and officer of two key subsidiaries in February.

To date, Melnyk has not proposed his slate of directors. He has told the company he may sell his shares or link up with an equity partner to buy it out.

"If Mr. Melnyk does act and nominates dissident directors, Biovail shareholders will be faced with a crucial choice," Chairman Doug Squires and CEO Bill Wells said in a letter mailed to shareholders.

"A return to a Melnyk-influenced company with all that entails, or a new way forward with a new, independent and experienced board, a new strategy driven by a proven business leader, and good prospects for sustainable long-term value for all shareholders."