Hudbay Minerals Inc. (“Hudbay” or the “company”)
(TSX, NYSE: HBM) today announced that it
has mailed a letter to shareholders regarding Hudbay and the proxy
contest being waged against the company by Waterton Global Resource
Management, Inc. (“
Waterton”). The letter to
shareholders highlights the positive momentum behind Hudbay’s proxy
campaign and a number of developments, including:
- On April 17, 2019, Hudbay’s largest shareholder, holding 13.4%
of the company’s outstanding shares at that time, confirmed to
Hudbay that it intends to vote FOR Hudbay’s director nominees;
- Independent analysts continue to support Hudbay’s slate of
director nominees, and warn against the disruption that Waterton’s
director nominees could bring to the board of directors and
management team;
- Waterton initiated a frivolous lawsuit against Hudbay, further
increasing the cost and disruption of its unnecessary proxy
contest; and
- With just over a week to go before the May 3, 2019 proxy voting
deadline, one of Waterton’s director nominees, Michael Anglin,
withdrew and is no longer standing for election.
The letter that Hudbay mailed to shareholders
also warns shareholders that Waterton director nominees Peter
Kukielski, Richard Nesbitt and Daniel Muñiz Quintanilla have track
records that could result in significant disruption to the
company’s positive momentum and risk the future value of your
investment in Hudbay. The letter was mailed on April 26
and is available on Hudbay’s website at
www.hudbayminerals.com.
Proxy Advisors Recognize Positive
Momentum at Hudbay
In recent days, proxy advisors Institutional
Shareholder Services Inc. (“ISS”) and Glass, Lewis
& Co. (“Glass Lewis”) have issued reports that
recognize the positive momentum at Hudbay and how the company’s
leadership is driving value creation. ISS concluded that
shareholders should withhold from voting for
Richard Nesbitt and Peter Kukielski, and Glass Lewis also
recommended that shareholders should withhold from voting for Mr.
Kukielski while noting that there is “some momentum
working against the director solicitation pursued by Waterton.” The
proxy advisor concerns with the Waterton director nominees are
consistent with the views expressed by many Hudbay shareholders and
independent analysts, who do not support the election of any
dissident director nominees beyond David Smith, who was previously
added to Hudbay’s slate. The company recommends that shareholders
vote using their GREEN proxy in support of
Hudbay’s ten director nominees.
In its report issued earlier this morning, ISS
highlights that Hudbay has outperformed its peers, has a
strengthening outlook and a track record of board refreshment1:
“It appears that over the last four completed
fiscal years, Hudbay's EBITDA margin has been well-aligned with the
ISS Peer Group median, and has even exceeded the peer median by 4
to 5 percentage points during that period…”
and
“At the same time, the board's contention that
the company's outlook has improved does not appear unfounded.
By the dissident's own admission, the company has recently
achieved some of its milestones, which may explain, at least in
part, Hudbay's share price appreciation since the end of last year.
Furthermore, when the company announced its third quarter 2018
results, the market reaction was positive, with shares rallying 23
percent…” [Emphasis added]
and
“The board has gone through some refreshment:
Colin Osborne joined the board last year, and in addition to
Waterton nominee Smith, the board has nominated another new
director, Richard Howes, at this AGM. Furthermore, the initial
management slate included a second Waterton nominee, Michael
Anglin, who recently withdrew his nomination after accepting a
directorship at a competing company. The board has indicated that
while the number of directors to be elected at this meeting has
been set at ten, the board intends to add one more independent
director following the meeting…”
Glass, Lewis & Co. (“Glass
Lewis”) issued a report regarding Hudbay and Waterton on
Friday, April 26, 2019. While Hudbay believes that there are a
number of significant flaws in the Glass Lewis’ analysis, the
company agrees with its views regarding positive momentum at Hudbay
and concerns with how a Waterton nominee could “portend a divisive
board dynamic”:
“Viewed at a high level, there would seem to be
some momentum working against the director solicitation pursued by
Waterton here. Indeed, Hudbay appears to be turning the corner on
the fully consolidated Rosemont project, having secured necessary
permits and initiated deliberations around development financing
and potential joint venture partners. In terms of balance sheet
stability, the Company has paid down material portions of the debt
accrued during the development of the Constancia copper project,
which is now in commercial production…”
and
“…Most notably, at the present juncture,
shareholders cannot be particularly certain Waterton's more recent
support for Alan Hair is meaningfully durable, particularly given
the Dissident is still promoting the election of erstwhile CEO
candidate Peter Kukielski as a regular board member. Credentials
aside, this dynamic -- which we expect would readily invite
speculation around a lame duck senior executive -- could portend a
divisive board dynamic which may not contribute to, and could, in
fact, substantively undermine, thoughtful discussion around
Hudbay's most attractive strategic and financial alternatives.
It is not immediately clear that any upside associated with
Mr. Kukielski's service warrants investors accepting this degree of
uncertainty, particularly if Waterton is prepared to continue
supporting Mr. Hair's service.” [Emphasis added]
A number of independent analysts have expressed
their views that Hudbay is on the right path:
“We believe Hudbay’s Information Circular and
proxy materials make a strong case for management to continue its
mandate…We believe that Hudbay will prevail against Waterton. The
achievement of key milestones has put the Company on a solid path
for future growth. We believe the current Hudbay team is
best positioned to execute on the Company’s strategy, and that a
replacement of management and board members would be disruptive to
the optimal execution of the Company’s plans.” [Emphasis
added]
Haywood Capital Markets, April 8, 2019
Another independent analyst also provided his
perspective on Hudbay’s constructive approach and upside, while
expressing concerns regarding Waterton’s lack of a differentiated
plan:
“The [Hudbay] proxy and the accompanying
51-page presentation present a detailed, and in our view,
comprehensive, counter-argument to Waterton's white paper that was
published in mid-February. We had previously noted that we found
Waterton's white paper less than compelling, given its lack of a
differentiated strategy for Hudbay…However, in our view, Hudbay has
addressed a number of the most significant issues that were
originally raised by Waterton…We believe that Hudbay
continues to have a strong runway of upcoming catalysts…” [Emphasis
added]
TD Securities, April 8, 2019
Hudbay’s Board remains committed to responsible
board renewal and recommends that shareholders vote FOR the
director nominees on its GREEN proxy (excluding
Mr. Anglin who is no longer standing for election). The
GREEN proxy and voting instruction form previously
mailed to shareholders in connection with the annual and special
meeting of shareholders may continue to be used by shareholders and
will continue to be valid, with any votes for Mr. Anglin not being
counted given he has withdrawn as a director nominee.
The ten director nominees include a new Hudbay
nominee, Richard Howes, and Waterton nominee David Smith. Assuming
Hudbay’s slate of director nominees is elected, this would result
in 20% of the board being refreshed in 2019, with six of ten
directors having joined the board in the last five years. In light
of Mr. Anglin’s withdrawal, following the annual and special
meeting of shareholders, Hudbay intends to immediately initiate a
process to identify an independent and qualified individual who
could join the board as an eleventh director.
Proxy Voting Information
Time is short and the stakes are high. In order
to ensure that your vote is counted at the annual and special
meeting of shareholders, shareholders are urged to vote only the
GREEN proxy FOR the nominees recommended by
Hudbay, and ensure that your proxy is received prior to the proxy
voting deadline of 10:00 a.m. (Toronto time) on Friday, May 3,
2019. The GREEN proxy and voting instruction form
previously mailed to shareholders in connection with the annual and
special meeting of shareholders may continue to be used by
shareholders and will continue to be valid, with any votes for Mr.
Anglin not being counted given he has withdrawn as a director
nominee.
For assistance voting your proxy, shareholders
should contact Laurel Hill Advisory Group at 18774527184
(toll-free for Hudbay shareholders in North America) or
1-416-304-0211 (collect call for Hudbay shareholders outside North
America) or assistance@laurelhill.com.
Forward-Looking
Information
This news release contains “forward-looking
statements” and “forward-looking information” (collectively,
“forward-looking information”) within the meaning of applicable
Canadian and United States securities legislation. Forward-looking
information is not, and cannot be, a guarantee of future results or
events.
Forward-looking information is based on, among
other things, opinions, assumptions, estimates and analyses that,
while considered reasonable by us at the date the forward-looking
information is provided, inherently are subject to significant
risks, uncertainties, contingencies and other factors that may
cause actual results and events to be materially different from
those expressed or implied by the forward-looking information. The
risks, uncertainties, contingencies and other factors that may
cause actual results to differ materially from those expressed or
implied by the forward-looking information may include, but are not
limited to, risks generally associated with the mining industry,
such as economic factors (including future commodity prices,
currency fluctuations, energy prices and general cost escalation),
as well as the risks discussed under the heading “Risk Factors” in
Hudbay’s most recent Annual Information Form.
Should one or more risk, uncertainty,
contingency or other factor materialize or should any factor or
assumption prove incorrect, actual results could vary materially
from those expressed or implied in the forward-looking information.
Accordingly, undue reliance should not be placed on forward-looking
information. Hudbay does not assume any obligation to update or
revise any forward looking information after the date of this
news release or to explain any material difference between
subsequent actual events and any forward-looking information,
except as required by applicable law.
About Hudbay
Hudbay (TSX, NYSE: HBM) is an integrated mining
company primarily producing copper concentrate (containing copper,
gold and silver), molybdenum concentrate and zinc metal. With
assets in North and South America, the company is focused on the
discovery, production and marketing of base and precious metals.
Directly and through its subsidiaries, Hudbay owns three
polymetallic mines, four ore concentrators and a zinc production
facility in northern Manitoba and Saskatchewan (Canada) and Cusco
(Peru), and copper projects in Arizona and Nevada (United States).
The company’s growth strategy is focused on the exploration and
development of properties it already controls, as well as other
mineral assets it may acquire that fit its strategic criteria.
Hudbay’s vision is to be a responsible, top-tier operator of
long-life, low-cost mines in the Americas. Hudbay’s mission is to
create sustainable value through the acquisition, development and
operation of high-quality, long-life deposits with exploration
potential in jurisdictions that support responsible mining, and to
see the regions and communities in which the company operates
benefit from its presence. The company is governed by the Canada
Business Corporations Act and its shares are listed under the
symbol "HBM" on the Toronto Stock Exchange, New York Stock Exchange
and Bolsa de Valores de Lima. Further information about Hudbay can
be found on www.hudbay.com.
For investor inquiries, please contact:
Laurel Hill Advisory Group(416) 304-0211 or 1
(877) 452-7184assistance@laurelhill.com
Candace BrûléDirector, Investor Relations
(416) 814-4387 candace.brule@hudbay.com
For media inquiries, please
contact:
Joel
Shaffer
Longview Communications and Public Affairs(416)
649-8006jshaffer@longviewcomms.ca
Scott BrubacherDirector, Corporate
Communications (416) 814-4373 scott.brubacher@hudbay.com
1 Permission to quote ISS and Glass Lewis was
neither sought nor obtained.
A PDF accompanying this announcement is
available
at http://ml.globenewswire.com/Resource/Download/352a4e51-0d45-4dfe-8c63-7ef79cff8c29
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