Both ISS and Glass Lewis Recommend Hudbay Shareholders Vote for Election of Waterton Nominees on the Blue Card
April 29 2019 - 9:24AM
Business Wire
Joins Glass Lewis in Supporting Waterton’s Case
for Board Refreshment and Recommends Shareholders Vote on
Waterton’s Blue Proxy Card FOR Election of David Smith and Daniel
Muniz Quintanilla as Hudbay Directors
Waterton Urges Fellow Hudbay Shareholders to
Vote for All Four of Waterton’s Independent, Highly-Qualified
Nominees to the Board
Vote on the BLUE
Proxy and Submit Prior to 5:00 p.m. (Eastern time) on Thursday May
2, 2019
Waterton Precious Metals Fund II Cayman, LP ("Waterton Mining
LP") and Waterton Mining Parallel Fund Offshore Master, LP
("Waterton Fund II"), each of which are managed by Waterton Global
Resource Management, Inc. ("WGRM," and collectively with Waterton
Mining LP and Waterton Fund II, "Waterton"), owning in the
aggregate 12.09% of the issued and outstanding common shares (the
"Shares") of Hudbay Minerals Inc. ("Hudbay" or the "Company")
(TSX:HBM) (NYSE:HBM) today announced that leading proxy advisory
firm Institutional Shareholder Services Inc. (“ISS”) has joined
Glass, Lewis & Co. (“Glass Lewis”) in recommending that
shareholders vote FOR change at Hudbay on Waterton’s Blue proxy
card. ISS recommended the election of Waterton’s independent,
highly-qualified director nominees – David Smith and Daniel Muniz
Quintanilla – to the Hudbay Board of Directors (the "Board") at the
Annual and Special Meeting of Shareholders (the “Meeting”).
In its report, ISS said the following:1
- “The dissident
has highlighted legitimate concerns around the company's
operational performance and capital allocation strategy, which
suggest that some degree of board change
would be beneficial.”
- “It appears Hudbay has underperformed the ISS Peer Group median in terms
of ROIC for four out of five completed fiscal
years. While the company has recovered after completing its
Constancia project, its pre-tax ROIC is still below 10 percent and
below its WACC.”
- “The company has been trading at a
discount to peers since early 2016,
likely reflecting market concerns over the return on its
substantial capex program and leverage…The substantial valuation gap persists even after the
strong rally in the company shares since Oct. 2018.”
- “(I)t seems reasonable to assume that
the dissident’s emphasis on improving capital
allocation played a role in reassuring markets the company
would steer in the right course. This point is reinforced when
looking at past operational and valuation data.”
- “Dissident nominee Daniel Muniz
Quintanilla has extensive experience overseeing copper mines in
South America and the U.S. Having served as at the board and
executive level for Southern Copper and Grupo Mexico, Muniz has
gained experience working for large cap
companies in the industry, which may be beneficial for
Hudbay as it transitions from a mid-tier to a larger
producer.”
- “(S)hareholders are also advised to
consider the removal of Kenneth Stowe – one of the three incumbents
targeted by the dissident, and arguably one of the directors most
accountable for the company's past performance, given his
eight-year tenure.”
Previously, Glass Lewis said:2
- “We are ultimately inclined to suggest the Dissident's core
case - i.e. that Hudbay has a value destructive capital
management and project development track record and a disconcerting
willingness to employ starkly regressive and misleading tactics to
deter shareholder action -- holds water
here.”
- “Indeed, recent and conspicuously-timed
rebound notwithstanding, we believe the
bulk of Hudbay's performance over the last several years
demonstrates an objectively substandard
commitment to preserving and improving shareholder
value.”
- “[A] closer look
suggests all is not well at Hudbay…a broader review of the
Company's returns suggests Hudbay has continually and uniformly
lagged its closest industry peers across substantially any
unaffected measurement period, including those falling after
completion of Constancia. This trend only appears to invert across
measurement periods falling after initiation of Waterton's
campaign, an unambiguously atypical swing
which management nevertheless attempts to frame as substantially or
entirely attributable to Hudbay's own efforts.”
Isser Elishis, Chief Investment Officer of Waterton Global
Resource Management, commented: “We are extremely pleased that both
ISS and Glass Lewis have supported our case for change to the
Hudbay Board. Waterton continues to believe our nominees have the
right experience and expertise to help Hudbay unlock its
significant potential and urges shareholders to vote FOR the
election of all four of our nominees – Peter Kukielski, Richard
Nesbitt, Daniel Muniz Quintanilla and David Smith. We are confident
our nominees are well-positioned to provide Hudbay with the best
opportunity for long-term value creation.”
Waterton urges shareholders to vote for the Waterton Nominees on
the BLUE form of proxy and/or
BLUE voting instruction form by
5:00 p.m. (Eastern time) on Thursday, May
2, 2019. Shareholders willing to express their support
for the Waterton Nominees may contact Kingsdale Advisors, our
strategic shareholder advisor and proxy solicitation agent, at
1-888-518-1563 toll-free in North America, or at 416-867-2272
outside of North America (collect calls accepted), or by email at
contactus@kingsdaleadvisors.com.
Visit www.NewHudbay.com for additional information.
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.
Legal Notices and Disclaimers
The data, information and opinions contained or referenced
herein (collectively, the "Information") is for general
informational purposes only for the holders of Shares
(“Shareholders”) in order to provide the views of Waterton
regarding certain changes we are requesting to the composition of
the Board, and other matters which Waterton believes to be of
concern to Shareholders described herein. The Information is not
tailored to specific investment objectives, the financial
situation, suitability, or particular need of any specific
person(s) who may receive the Information, and should not be taken
as advice in considering the merits of any investment decision. The
views expressed in the Information represent the views and opinions
of Waterton, whose opinions may change at any time and which are
based on analyses of Waterton and its advisors. Unless otherwise
indicated, the Information has been derived or obtained from public
disclosure and filings with respect to and/or made by Hudbay and
other issuers that we consider to be comparable to Hudbay, and from
other third party reports (see "Legal Notices and Disclaimers -
Disclaimer Respecting Publicly Sourced Information" in Waterton’s
information circular dated April 15, 2019 (the “Waterton
Circular”), a copy of which is available on SEDAR at www.sedar.com
or on www.newhudbay.com).
The Information contains forward-looking statements or
forward-looking information within the meaning of applicable
securities laws (collectively, "forward-looking statements"),
including, without limitation, Waterton's and Hudbay's respective
priorities, plans and strategies for Hudbay and certain members of
Hudbay's operational, compensation and other noted peer groups'
anticipated financial and operating performance and business
prospects. All statements and information, other than statements of
historical fact, included herein are forward-looking statements,
including, without limitation, statements regarding activities,
events or developments that Waterton expects or anticipates may
occur in the future. Certain forward-looking statements contained
herein may be considered to be future-oriented financial
information or a financial outlook for the purposes of applicable
securities laws. 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 known and unknown risks and uncertainties, including but
not limited to those set forth in the Waterton Circular under the
heading "Legal Notices and Disclaimers – Forward-Looking
Statements" and 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 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. Unless expressly
stated otherwise, the forward-looking statements included herein
are made as of the date hereof and Waterton disclaims any
obligation to publicly update such forward-looking statements,
except as required by applicable law.
_______________________________1 Permission to quote ISS was
neither sought nor obtained. Emphasis added.2 Permission to quote
Glass Lewis was neither sought nor obtained. Emphasis added.
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InvestorsKingsdale AdvisorsToll-Free (within North
America): 1-888-518-1563Call Collect (outside North America):
1-416-867-2272E-mail: contactus@kingsdaleadvisors.com
MediaSloane & CompanyDan Zacchei / Joe Germani:
1-212-486-9500E-mail: Dzacchei@sloanepr.com /
JGermani@sloanepr.com
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