Highlights Current Board and Management’s
Pattern of Value Destruction and Failure to Address Deep-Rooted
Issues at Hudbay, Including Flawed Strategy, Damaged Credibility
and Broken Culture
Believes a New Entirely Independent Board with
Relevant Expertise and an Upgrade in Leadership, including
Transformational CEO Candidate Peter Kukielski, is Necessary to
Rebuild Hudbay
Outlines a Comprehensive and Holistic Corporate
Strategy Focused on Creating Long-Term Shareholder Value and
Closing Existing Valuation Gap
Notes that Hudbay Has the Potential for
Material Share Price Appreciation
View Full Presentation at www.NewHudbay.com
Waterton Global Resource Management, Inc. (collectively with
Waterton Precious Metals Fund II Cayman, LP, Waterton Mining
Parallel Fund Offshore Master, LP and certain other affiliates,
“Waterton” or “we” or “us”), which owns approximately 12% of the
issued and outstanding shares (the “Shares”) of Hudbay Minerals
Inc. (“Hudbay” or the “Company”) (TSX:HBM) (NYSE:HBM), today
published a comprehensive presentation detailing a path forward for
Hudbay to recognize its potential. Waterton highlights that with
the right leadership and a truly independent Board of Directors
with the necessary expertise, Hudbay will be able to close the
existing valuation gap to its peer group1, resulting in meaningful
share price appreciation.
The full presentation can be viewed at www.NewHudbay.com.
Key highlights from the presentation include:
- The current Hudbay is broken due to
its deep-rooted problems.
- Hudbay’s current leadership team has
proven unable to effectively run a global mining company, resulting
in abysmal 1-year, 3-year and 5-year Total Shareholder Returns
(“TSR”) relative to its peer group, -35%, -66% and -71%,
respectively.2 Hudbay’s chronic underperformance and significantly
discounted valuation is a direct consequence of its:
- Flawed strategy: The Company has
a myopic short-term strategy that does not translate into
shareholder value in a remarkably long-term industry.
- Damaged credibility: Leadership
consistently misguides the market and fails to deliver on stated
portfolio objectives, undermining stakeholder trust.
- Broken culture: The current
Board has presided over almost a decade of gross underperformance
and failed to hold management to account.
- New Hudbay has outlined a clear
corporate strategy.
- New Hudbay will build a mid-tier base
metals company that aims to deliver long-term shareholder value
with a focus on the Americas. New Hudbay will execute on its
strategy by:
- Having Trusted Leadership
- A new Board with relevant, diverse, and
global experience to fill the knowledge gaps on the current Board
and transform Hudbay into a world-class intermediate copper
company.
- Richard Nesbitt as proposed Chairman, a
tenacious “blue-chip” leader who has led some of Canada’s largest
and most important institutions and has proven experience revamping
companies’ strategic direction and culture.
- Peter Kukielski as proposed CEO, a
proven and respected leader with global mining experience and a
track record of creating shareholder value.
- Adopting a Culture of Accountability
- Ensure management is held to account
and fully aligned with shareholders.
- Having a Disciplined Approach to
Capital Allocation
- Ensure that capital is allocated in
accordance with a defined strategy, with a focus on return on
capital.
- Optimizing its Portfolio
- Undertake a holistic portfolio review
and implement an optimization plan to maximize long-term
shareholder value.
- Being Performance Focused
- Set transparent and value accretive
performance objectives and, most importantly, deliver on them.
- The clear objective is to achieve
long-term share price appreciation.
- With the new leadership team at the
helm and by executing on its clearly defined strategy, Hudbay can
win back the trust of the capital markets and close the valuation
gap to its peer group–allowing shareholders to benefit from a
material increase in the share price.
Waterton is asking its fellow shareholders to elect an
independent Board with impeccable credentials, relevant skills and
a track record of success – including a proposed CEO with global
mining experience – to redefine a New Hudbay with a clear corporate
strategy and a focus on creating long-term shareholder value.
Waterton looks forward to effecting immediate, and critically
necessary, change at the 2019 Annual Meeting in order to achieve
greater accountability, transparency and value for all Hudbay
stakeholders.
About Waterton
Waterton is an investment firm that manages capital for global
institutional investors, sovereign wealth funds and endowments. The
firm has ~US$2 billion in assets under management and focuses
solely on the metals and mining sector. Waterton has a culture of
thoroughness and a disciplined approach to capital allocation, and
utilizes its significant industry expertise to produce out-sized
risk-adjusted returns.
Additional Information:
This press release does not constitute an offer to sell, or a
solicitation of an offer to purchase, any securities, or the
solicitation of Hudbay shareholders (“Shareholders”), by any person
in any jurisdiction in which such an offer or solicitation is not
authorized or in which the person making such offer or solicitation
is not qualified to do so or to any person to whom it is unlawful
to make such an offer or solicitation. Readers are referred to
Waterton’s information circular dated February 14, 2019, as the
same may be sets set forth the disclosure required under applicable
Canadian securities and corporate laws, including the disclosure
required by section 9.2(4) of National Instrument 51-102 –
Continuous Disclosure Obligations and section 150(1.2) of the
Canada Business Corporations Act. Waterton is mailing the Circular
to certain Shareholders and filing it on SEDAR in connection with
issuing this press release and publishing the presentation in order
to allow it to have discussions with Shareholders regarding its
nominees for election to the Board in compliance with the
solicitation requirements under applicable Canadian corporate and
securities laws. Once filed, a copy of the Circular may be
obtained, on request, without charge from Kingsdale Advisors by
contacting them in the manner set out above or on the Company’s
profile on SEDAR at www.sedar.com.
This solicitation and any other solicitation made by Waterton in
advance of Hudbay’s upcoming 2019 annual meeting of Shareholders
(the “Annual Meeting”) is, or will be, as applicable, made by
Waterton and not by or on behalf of the management of Hudbay.
Waterton may solicit the support and, ultimately, the proxies of
Shareholders by mail, telephone, facsimile, email or other
electronic means, as well as by newspaper or other media
advertising and in person by managing members, directors, officers
and employees of Waterton, or any associates or affiliates of the
foregoing, or any of Waterton’s director nominees or their
respective associates or affiliates. For example, it is expected
that Waterton representatives and/or one or more of Waterton’s
director nominees may attend in-person meetings with institutional
shareholders and other significant shareholders. Any managers,
directors, officers and employees of Waterton and their affiliates
who solicit on behalf of Waterton will do so for no additional
compensation, and none of the Waterton nominees will receive any
special compensation in connection with the solicitation. Waterton
may also engage the services of one or more agents and authorize
other persons to assist in soliciting proxies on behalf of
Waterton. Waterton has entered into an agreement with Kingsdale
pursuant to which Kingsdale has agreed to act as Waterton’s
solicitation advisor and, should Waterton commence a formal
solicitation of proxies, its proxy solicitation agent. Pursuant to
this agreement, Kingsdale will receive a fee of C$75,000, plus
disbursements. In addition, Kingsdale may be entitled to a success
fee on the successful completion of Waterton’s solicitation, as
determined by Waterton in consultation with Kingsdale. All costs
incurred for any solicitation will be borne by Waterton, provided
that, subject to applicable law, Waterton may seek reimbursement
from Hudbay of Waterton’s out-of-pocket expenses, including proxy
solicitation expenses and legal fees, incurred in connection with a
successful reconstitution of the Board.
Forward-Looking Statements
Certain information included herein contains forward-looking
statements or forward-looking information within the meaning of
applicable Canadian securities laws (collectively, “forward-looking
statements”), including, without limitation, Waterton’s and
Hudbay’s respective priorities, plans and strategies for Hudbay and
Hudbay’s and certain members of Hudbay’s operational, compensation
and other noted peer groups’ anticipated financial and operating
performance and business prospects, and Waterton’s intentions to
solicit proxies for the election of Waterton’s director nominees to
the Board at the Annual Meeting. All statements and information,
other than statements of historical fact, included in herein are
forward-looking statements, including, without limitation,
statements regarding activities, events or developments that
Waterton expects or anticipates may occur in the future. These
forward-looking statements can be identified by the use of
forward-looking words such as “will”, “expect”, “intend”, “plan”,
“estimate”, “anticipate”, “believe” or “continue” or similar words
and expressions or the negative thereof. There can be no assurance
that the plans, intentions or expectations upon which these
forward-looking statements are based will occur or, even if they do
occur, will result in the performance, events or results expected.
We caution readers not to place undue reliance on forward-looking
statements contained herein, which are not a guarantee of
performance, events or results and are subject to a number of
risks, uncertainties and other factors that could cause actual
performance, events or results to differ materially from those
expressed or implied by such forward-looking statements. These
factors include: changes in Hudbay’s strategies, plans or
prospects; general economic, industry, business, regulatory and
market conditions; changes in Hudbay’s Board composition or size,
including the identity and number of management nominees ultimately
proposed by Hudbay for election to the Board at the Annual Meeting;
actions of Hudbay and its subsidiaries or competitors; conditions
in the mining industry; risks relating to government regulation and
changes thereto, including in respect of the regulations concerning
board composition, proxy solicitation and shareholder meetings; the
state of the economy including general economic conditions globally
and economic conditions in the jurisdictions in which Hudbay
operates; the unpredictability and volatility of Hudbay’s share
price; availability of sufficient financial resources to fund
Waterton’s solicitation efforts; changes in commodity prices, tax
rates and government mark-ups; currency fluctuations;
recommendations of and changes to Waterton’s proxy solicitors and
advisors; reliance on information and control systems; restrictive
covenants relating to current and future indebtedness of Hudbay and
other contracts and instruments to which Hudbay is subject; and
dilution and future sales of Shares. These factors should not be
construed as exhaustive. Shareholders are cautioned that all
forward-looking statements involve known and unknown risks and
uncertainties, including those risks and uncertainties detailed in
the continuous disclosure and other filings of Hudbay and certain
members of Hudbay’s operational, compensation and other noted peer
groups with applicable securities regulators, copies of which are
available on SEDAR at www.sedar.com or on the Electronic Data
Gathering, Analysis, and Retrieval (“EDGAR”) at www.sec.gov. We
urge you to carefully consider those risks and uncertainties. The
forward-looking statements contained herein are expressly qualified
in their entirety by this cautionary statement. The forward-looking
statements included herein are made as of the date of this press
release and Waterton undertakes no obligation to publicly update
such forward-looking statements, except as required by applicable
laws.
1 Waterton believes an appropriate peer group for Hudbay should
only include companies that (i) have a market capitalization of
greater than US$500 million, (ii) have material exposure to the
Americas, (iii) have copper comprising greater than 50% of
reserves, and (iv) are publicly listed on a major stock exchange,
and not the peer group described in Hudbay’s public disclosure.
2 TSR calculated as of October 4, 2018, the last trading day
before Waterton first issued a public letter to Hudbay's Board of
Directors.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190219005584/en/
InvestorsKingsdale AdvisorsToll-Free (within North
America): 1-888-518-1563Call Collect (outside North America):
1-416-867-2272E-mail:
contactus@kingsdaleadvisors.comMediaSloane & CompanyDan
Zacchei / Joe Germani: 1-212-486-9500E-mail:
Dzacchei@sloanepr.comJGermani@sloanepr.com
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