Company files Management Information Circular for March 25, 2009 Special Meeting of Shareholders
TORONTO, ONTARIO, Feb 27, 2009 (Marketwire via COMTEX News Network) -- HudBay Minerals Inc. (TSX:HBM) -
For full details of HudBay Minerals' position on the proposal to replace the current Board of Directors, please visit www.hudbayminerals.com/strongfuture.
HudBay
Minerals Inc. ("HudBay", "the company") (TSX:HBM) urges shareholders to
vote AGAINST the resolution to remove the current HudBay Board of
Directors and replace them with nominees of SRM Global Master Fund
Limited Partnership ("SRM") at the company's special meeting of
shareholders scheduled for 10:00 a.m. ET on March 25, 2009 at the Design
Exchange in Toronto.
"Our Board of Directors is the right board
for the present and the future," said Allen J. Palmiere, HudBay's chief
executive officer. "Our board has a clear strategy to
build long-term value for all shareholders while protecting the
financial strength of the company."
The HudBay Minerals Board is a
highly
qualified Board that is well-positioned to provide strong leadership for
all the company's shareholders, and its stakeholders. Board members
have an average of 27 years of experience in the mining industry
(including as advisors to mining companies), an average of 12 years of
experience as independent directors of public companies, and are all
committed to high standards of corporate governance.
The special
meeting of shareholders was requisitioned by SRM, a Monaco-based hedge
fund that proposes to replace the current Board with its own slate of
nominees. SRM did not accept HudBay's offer to nominate two directors to
HudBay's Board. Not only would SRM's proposal allow it to gain control
over HudBay Minerals without paying the company's other shareholders any
compensation, it would place the company in the hands of a group that
has not articulated a long-term strategy for growth.
Instead, SRM has on several occasions asked HudBay Minerals to initiate a
major share buyback program, a misguided tactic that, in the midst of
today's global economic crisis, could jeopardize HudBay's long-term
future.
In contrast, certain of the SRM Nominees lack mining and
governance experience. Based on information provided to HudBay by SRM
and other public sources, three of the eight SRM Nominees appear to have
no significant mining industry experience, and five of the eight SRM
Nominees appear to have no significant experience as independent
directors of a Canadian public company.
"We believe SRM is
motivated by a desire to cause a short-term increase in HudBay's share
price for their own benefit, is disregarding the best interests of
HudBay, and is potentially destroying long-term shareholder value," said
Mr. Palmiere. "We understand from media reports that SRM is
under pressure to improve its short-term investment results before some
of its investors have the opportunity to withdraw their funds.
Shareholders should be under no illusions that SRM's efforts are
anything other than an attempt to acquire control of HudBay without
paying them a premium."
HudBay Minerals has mailed a letter to
its shareholders, appended to this news release, as well as a Management
Information Circular, explaining the basis on which the Board of
Directors has unanimously recommended that shareholders vote against the
resolution proposed by SRM. The circular, along with a Notice of
Special Meeting, has been filed on SEDAR (www.sedar.com), and posted to HudBay's website (www.hudbayminerals.com/strongfuture). The company will also host a
conference call and webcast today at 10:00 a.m. ET (see details below).
Conference Call and Webcast
Date: Friday, February 27, 2009
Time: 10:00 a.m. (Eastern Time)
Webcast: www.hudbayminerals.com
Dial in: 416-915-5762 or 800-731-5774
Replay: 416-640-1917 or 877-289-8525
Replay Passcode: 21298451#
The conference call replay will be available until midnight
(Eastern Time) on March 25, 2009. An archived audio webcast of the call
also will be available on HudBay Minerals' website.
Voting Instructions for BENEFICIAL (NON-REGISTERED) SHAREHOLDERS
If
your common shares are held in a brokerage account a BLUE voting
instruction form or BLUE proxy was mailed to you. Only vote the BLUE
voting instruction form or BLUE proxy as follows:
Canadian Shareholders: Visit www.proxyvote.com and enter your 12
digit control number or call 1-800-474-7493 or fax your BLUE
proxy to (905) 507-7793 or toll free at 1-866-623-5305 to ensure
it is received before the deadline.
U.S. Shareholders: Visit www.proxyvote.com and enter your 12
digit control number or call 1-800-454-8683.
Voting Instructions for REGISTERED SHAREHOLDERS
If the
common shares are held in your own name, fax the BLUE proxy to Equity
Transfer & Trust Company at 416-595-9593 or Kingsdale at
416-867-2271 or 1-866-545-5580 or visit www.voteproxyonline.com and enter your control number.
For
assistance in voting your BLUE proxy, please contact HudBay's proxy
solicitation agent, Kingsdale Shareholder Services Inc., at toll-free
1-866-581-0508 or 1-416-867-2272.
HudBay Minerals Inc.: Strength to Build the Future
HudBay
Minerals Inc. (TSX:HBM) is a Canadian integrated mining company with
assets in North and Central America principally focused on the
discovery, production and marketing of base metals. The company's
objective is to increase shareholder value through efficient operations,
organic growth
and accretive acquisitions, all while maintaining its
financial strength. A member of the S&P/TSX Composite Index and the
S&P/TSX Global Mining Index, HudBay Minerals is committed to high
standards of corporate governance and sustainability.
Forward Looking Information
This
news release and its attachments contain "forward-looking information"
within the meaning of applicable securities laws. Forward looking
information includes but is not limited to information concerning the
shareholders' meeting scheduled for March 25, 2009, the intentions of
SRM, and the strategy and intentions of HudBay and its board of
directors. Generally, forward-looking information can be identified by
the use of forward-looking terminology such as "plans", "expects", or
"does not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates", "understands" or "does not
anticipate", or "believes" or
variations of such words and phrases or statements that certain actions,
events or results "will", "may", "could", "would", "might", or "will be
taken", "occur", or "be achieved". Forward-looking information is based
on the views, opinions, intentions and estimates of management at the
date the information is made, and is based on a number of assumptions
and subject to a variety of risks and uncertainties and other factors
that could cause actual events or results to differ materially from
those anticipated or projected in the forward-looking information
(including the actions of other parties who have agreed to do certain
things and the approval of certain regulatory bodies).
Many of
these assumptions are based on factors and events that are not within
the control of HudBay and there is no assurance they will prove to be
correct. Factors that could cause actual results or events
to vary materially from results or events anticipated by such
forward-looking information include court and/or other regulatory
approval, action by an intervening party or parties, future agreements
reached with third parties, changes in market conditions, variations in
ore grade or recovery rates, risks relating to international operations,
fluctuating metal prices and currency exchange rates, changes in
project parameters, the possibility of project cost overruns or
unanticipated costs and expenses, labour disputes and other risks of the
mining industry, failure of plant, equipment or processes to operate as
anticipated as well as those risk factors discussed in the Annual
Information Form for the year ended December 31, 2007, and as contained
in the Management Discussion and Analysis for the three and nine month
period ended September 30, 2008, which risks may cause actual results to
differ materially from any forward-looking statement.
Although
HudBay has attempted to identify important factors that could cause
actual actions, events or results to differ materially from those
described in forward-looking information, there may be other factors
that cause actions, events or results not to be anticipated, estimated
or intended. There can be no assurance that forward-looking information
will prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information. HudBay
undertakes no obligation to update forward-looking information if
circumstances or management's estimates or opinions should change except
as required by applicable securities laws. The reader is cautioned not
to place undue reliance on forward-looking information.
This news
release and the information contained herein does not
constitute an offer of securities for sale in the United States and
securities may not be offered or sold in the United States absent
registration or exemption from registration.
(HBM-P)
(HBM-G)
Appendix: Letter to Shareholders
Dear HudBay Shareholder:
Your
company is under siege. SRM Global Master Fund Limited Partnership
("SRM"), a Monaco-based hedge fund, wants to take control of the board
of directors of HudBay Minerals Inc. ("HudBay").
We believe that
by replacing the board of directors of HudBay (the "Board") with its own
slate of nominees, SRM would gain control of HudBay and its business,
including hiring management and creating and executing an undisclosed
business plan. HudBay's current Board is the board for the present and
the future. Your Board has a clear strategy to build long-term value for
your investment in HudBay. The Board
unanimously recommends that you submit the enclosed BLUE form of proxy
to send a message, loud and clear, that you are AGAINST SRM's proposal
to remove your current Board.
Control Without a Premium
A
meeting of the shareholders of HudBay has been scheduled for 10:00 a.m.
(Eastern Time) on March 25, 2009 at the Design Exchange (Trading Floor),
234 Bay Street, Toronto Dominion Centre, Ernst & Young Tower,
Toronto, Ontario, M5K 1B2. The meeting will be held to consider a
proposal from SRM to remove your current Board and replace them with
SRM's nominees (the "SRM Nominees"), nominees that we believe are not up
to the task of leading HudBay into the future. You have a very clear
choice ahead of you at the upcoming meeting: either support the current
management and Board, or turn your company over to SRM and its
hand-picked inexperienced nominees.
HudBay has offered
to place two of SRM's Nominees on the HudBay Board; an offer which SRM
did not accept. Instead, SRM is focused on advancing its own agenda at
the expense of other HudBay shareholders. By replacing the current Board
with its own slate of nominees, SRM would gain control of HudBay
without any compensation being paid to other shareholders. In most
acquisitions of control, shareholders receive a significant premium to
the current share price in exchange for relinquishing control of their
company. SRM is offering no such premium. If SRM is interested in
controlling your company, let them make a premium offer on the open
market instead of attempting to gain control through the back door.
Our Strategy
HudBay
has one of the strongest financial positions in its Canadian peer
group. Your Board's strategy has been to use this competitive advantage
to the benefit of all stakeholders by
acquiring attractive mining assets at low prices, while preserving
HudBay's financial strength and preserving our core assets and
operations in Manitoba. We did this with the proposed acquisition of
Lundin Mining Corporation ("Lundin") - a transaction that would have
provided HudBay with significant enhanced potential for near-term and
long-term growth. We seized the opportunity to acquire Lundin to gain
access to a strong group of producing assets in low-risk jurisdictions
like Portugal and Sweden.
Your Board carefully considered all
aspects of the Lundin acquisition. In its review, consideration,
negotiation and approval of the arrangement agreement with Lundin, your
Board followed good corporate governance practices and fully complied
with all of the legal obligations that it owes to HudBay and its
shareholders. In arriving at the conclusion that the Lundin acquisition
was in
the best long-term interests of HudBay and its shareholders, the Board
relied on the following:
- The strength and geographic diversity of Lundin's assets;
-
The acquisition was structured to preserve HudBay's all important cash
balances that are of paramount importance to survive the current
economic environment and develop new assets like the Lalor project;
- The drop in Lundin's share price, which your Board believed unduly discounted Lundin's business;
-
Over 560 person-days of due diligence conducted by HudBay's management,
advisors and consultants in the seven jurisdictions in which Lundin has
assets and operations;
- The fairness opinion delivered by GMP Securities L.P. to the Special Committee; and
- The involvement and unanimous recommendation of the Special Committee.
Your
Board carefully considered the issue as to whether a
HudBay shareholders' meeting should be called to approve the Lundin
acquisition. Over the course of negotiations, Lundin made it clear it
would not proceed with the proposed transaction if HudBay chose to hold a
shareholder vote on the matter. Lundin was not prepared to put itself
"in play" and a high degree of deal certainty was a fundamental
objective of Lundin. Accordingly, when considering whether to agree to a
transaction with Lundin, your Board had two choices: either walk away
from a compelling and long-term value-enhancing acquisition or proceed
without a HudBay shareholder vote. Your Board was thoroughly advised as
to the legal and regulatory requirements of Canadian public companies
and concluded that HudBay was not legally required to seek shareholder
approval of the Lundin acquisition. In choosing to proceed, your Board
ultimately concluded that the attractiveness of the
Lundin acquisition justified foregoing a HudBay shareholder vote.
On
December 10, 2008, the Toronto Stock Exchange ("TSX") accepted notice
of the Lundin acquisition, without imposing a condition that it be
approved by HudBay shareholders. On January 23, 2009, the Ontario
Securities Commission ("OSC"), overruled the decision of the TSX and
concluded that the TSX should have used its broad and far-reaching
discretionary authority to require a HudBay shareholder vote.
HudBay
has engaged in consultations with many of its shareholders regarding
the Lundin acquisition. The HudBay Board received very strong feedback
from many of its shareholders indicating that they would vote against
the Lundin acquisition if the vote was put to them. This negative
shareholder sentiment is further evidenced by the market reaction to the
announcement of the signing of the Arrangement Agreement on
November 21, 2008 whereby the HudBay share price dropped by 40% and the
subsequent rebound in HudBay's share price following the OSC's
announcement that a HudBay shareholder vote would be required to approve
the Lundin acquisition. Further, many financial analysts have been
negative regarding the Lundin acquisition. In addition, HudBay's
advisors have indicated that, based on discussions with significant and
influential HudBay shareholders and their experience in similar
situations, the shareholders of HudBay would not approve the Lundin
acquisition if put to a vote. Based on the foregoing, the Board
determined that the HudBay shareholders did not approve of the Lundin
acquisition and accordingly a decision to agree to terminate the Lundin
acquisition was made by your Board. HudBay will, however, retain its
19.9% ownership stake in Lundin that it acquired on December 11, 2008.
In
consideration of terminating the Lundin acquisition and in recognition
of HudBay's ownership position in Lundin, HudBay received favourable
concessions from Lundin that would not have otherwise been available to
HudBay had the Lundin acquisition proceeded to a vote of HudBay
shareholders and was subsequently voted down. HudBay was also successful
in negotiating that it would not be required to pay any break fee or
other costs associated with the termination of the Lundin acquisition.
Under the circumstances, the HudBay Board concluded that in light of the
above, it was in the best interests of HudBay to terminate the Lundin
acquisition and not hold a vote of HudBay shareholders to consider the
matter.
Listening to HudBay Shareholders and Enhancing Corporate Governance
Your Board has been listening to shareholders and considering opportunities to improve on its already high
standards of corporate governance. In that regard, the Board has determined to implement the following changes:
-
At the next Annual General Meeting of the HudBay shareholders, you will
be asked to approve an amendment to HudBay's by-laws to require
shareholder approval when, in connection with an acquisition, the
Company proposes to issue common shares in excess of 25% of the common
shares then outstanding;
- HudBay will adopt meaningful share
ownership guidelines for executive officers and directors of the Company
consistent with those of Canadian mining issuers of a similar size;
-
Any new stock option plan implemented by HudBay will include
performance-based vesting thresholds consistent with those of Canadian
mining issuers of a similar size; and
- HudBay will adopt the Canadian Coalition on Good Governance's guidelines on majority voting, whereby
director nominees who receive more than 50% of votes as "withheld" will offer to resign from the Board.
In
addition, the Corporate Governance and Nominating Committee will
undertake a selection process to recruit additional director candidates
who possess appropriate background and experience in corporate
governance.
Your Board believes that the limitation on dilution
without a shareholder vote, in particular, will place HudBay at the
forefront of current governance best practices. Your Board is listening
to shareholders and is committed to the highest standards of corporate
governance.
The Way Forward
SRM is a hedge fund which we
understand from media reports is under pressure to improve its
short-term investment results before some of its investors have the
opportunity to withdraw their funds. This short-term objective may
conflict with what is in the
long-term best interests of HudBay and its shareholders.
On
several previous occasions SRM requested that HudBay utilize its cash
balances to conduct a major share repurchase program. SRM has proposed
no other meaningful strategies whatsoever for HudBay's future. In the
midst of the current global economic crisis and commodity price
environment, HudBay's cash balance is a precious asset that cannot be
replicated. It is unclear how long the current depressed metals market
will last and HudBay could experience substantial negative cash flow
after sustaining capital expenditures are considered. In addition,
HudBay's lenders have refused to renew HudBay's $80 million undrawn
credit facility that is due to expire February 28, 2009 because of
uncertainty regarding the strategic direction of HudBay and concern that
a new Board might distribute much of HudBay's cash to shareholders.
Your
Board continues to believe that SRM's proposed strategy of spending cash
on a major share repurchase program would be misguided and not in the
best interests of HudBay or its shareholders.
Certain of the SRM Nominees Lack Industry and Governance Experience
Based
on biographies provided to HudBay by SRM and other public sources,
three of the eight SRM Nominees appear to have no significant mining
industry experience (Messrs. Voorheis, Barraclough and Hibben). Five of
the SRM Nominees appear to have no significant experience as independent
directors of a Canadian public company (Messrs. Jones, Knowles, Gordon,
Barraclough and Hibben). In addition, only Messrs. Jones, Gordon and
Knowles have experience in senior management positions with mining
companies and if appointed, Mr. Jones and Mr. Gordon will lack
independence given their recent former employment at HudBay. Further,
if as presumed by the Board, Mr. Knowles is appointed to management, he
too would lack independence. The majority of the SRM Nominees have no
working knowledge of HudBay, its business or strategy.
HudBay's Current Directors are the Board for the Present and the Future
HudBay's
current directors have extensive experience in the mining industry
(including as advisors to mining companies), with an average of 27 years
of experience, and equally deep experience as independent public
company directors, with an average of 12 years of experience. They are
committed to high standards of corporate governance and to creating
long-term value for all of HudBay's shareholders.
In today's
uncertain times, HudBay needs a strong Board that is experienced and
focused on long-term success. SRM proposes to install, for the most
part, an SRM-controlled, inexperienced board for the
purposes of carrying out an undisclosed plan that could jeopardize
HudBay's long-term future. THIS IS NOT THE TIME TO TURN HUDBAY OVER TO
SRM AND THEIR HAND-PICKED SLATE OF NOMINEES. WE URGE YOU TO STOP SRM IN
ITS ATTEMPT TO TAKE CONTROL OF HUDBAY. YOUR BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT YOU VOTE YOUR BLUE PROXY AGAINST THE REMOVAL
OF THE CURRENT BOARD.
Regardless of the number of shares you
own, you must take action and cast your vote today by completing and
returning ONLY the BLUE proxy. If you have any questions or need
assistance in casting your vote or completing your BLUE proxy, please
call Kingsdale Shareholder Services Inc. at toll-free 1-866-581-0508 and
they will be happy to help. Or, visit www.hudbayminerals.com/strongfuture for additional information.
Regards,
M. Norman
Anderson, Chairman
Allen J. Palmiere, Chief Executive Officer
SOURCE: HudBay Minerals Inc.
Investor Relations contact:
HudBay Minerals Inc.
Annemarie Brissenden, Manager, Investor Relations
(416) 362-0615
Email: annemarie.brissenden@hudbayminerals.com
Website: www.hudbayminerals.com
Media contact:
Barnes McInerney Inc.
John Vincic, Executive Vice President
(416) 367-5000 ext. 249
Email: jvincic@barnesmcinerney.com
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