TORONTO, ONTARIO, Mar 15, 2009 (Marketwire via COMTEX News Network)
-- SRM Global Master Fund LP ("SRM"), Peter R. Jones and the SRM
nominees have failed to present a strategy for the future of HudBay
Minerals Inc. ("HudBay", "the company") (TSX:HBM), said Riskmetrics, a
proxy advisory service, in its report dated March 13, 2009 that
highlights the same failing identified by Glass Lewis & Co., another
leading independent proxy advisory service. Riskmetrics also raised
serious concerns about SRM's plan to install G. Wesley Voorheis, a paid
consultant to SRM, as chairman of HudBay's Board of Directors.
Despite
these concerns and its own policy that dissidents proposing to replace a
majority of a Board, let alone the entire Board, must provide a
well-reasoned and detailed business plan, Riskmetrics has not supported
HudBay's current Board of Directors in its recommendation. It
appears, however, that Riskmetrics' conclusion is based on an incomplete
understanding of the facts. In commenting that HudBay's Board did not
undertake sufficient efforts to renegotiate the proposed acquisition of
Lundin Mining Corporation ("Lundin") and that it delayed holding a
requisitioned meeting of shareholders, Riskmetrics fails to consider
that HudBay had a binding legal obligation to complete the Lundin
acquisition that did not permit HudBay to subject the transaction to a
shareholder vote absent regulatory intervention. Therefore, Riskmetrics
did not give any consideration to the substantial legal liability that
HudBay would have been exposed to had it acted differently.
Replacing
the entire HudBay Board would be disruptive and inappropriate given
SRM's 11% ownership interest in HudBay, said Glass Lewis, a leading
independent proxy service, as announced on March 13, 2009. HudBay urges
shareholders to vote their BLUE proxy AGAINST SRM's
removal resolution.
"HudBay has the right board and the right
strategy to enhance shareholder value," said Colin K. Benner, Interim
CEO of HudBay Minerals. "In contrast, SRM has proposed a less
experienced and conflicted board lacking a well thought out strategy,
and is too much of a risk for shareholders to take with HudBay's future.
HudBay's current directors have extensive experience in the mining
industry, with an average of 27 years of experience, and an average 11
years of independent director experience."
Peter R. Jones and the SRM Nominees have no strategy for HudBay
In
its dissident proxy circular dated March 2, 2009, SRM acknowledged that
the SRM Nominees have not developed a strategic plan for HudBay,
despite having had two months since the identification of the SRM
Nominees to do so, and despite SRM's assertion that Peter R. Jones is
"intimately familiar"
with HudBay. However, in response to criticism from HudBay shareholders
and Glass Lewis, Mr. Jones hastily assembled a strategy that appeared in
the media on March 12, 2009 and in a later press release, Mr. Jones
outlined a number of initiatives as part of his plans.
Balmat Mine and Chisel North Mine
Mr.
Jones has suggested that he would like to restart the Balmat and Chisel
North mines, whose operations were suspended by HudBay in August 2008
and January 2009, respectively. Mr. Jones reopened the Balmat mine based
on overly optimistic production and cost assumptions; HudBay's board
had to close the Balmat mine following losses of more than $80 million.
HudBay's decision to suspend production at Chisel North is part of a
strategy to maximize the value of Chisel North's resources and the
likely success of a mine at Lalor. Not only would it be
value-destructive to continue to
mine Chisel North at current low zinc prices, it would compromise the
viability of new opportunities, like Lalor. HudBay's strategy is to
reopen Chisel North in several years at what are expected to be higher
zinc prices, and eventually transition the Chisel North workforce at the
time to Lalor to facilitate a smooth ramp-up of Lalor. Similarly,
development of Lalor will support the addition of a copper recovery
circuit at the Snow Lake concentrator, thereby enhancing the economics
of mining at Chisel North.
Flin Flon Copper Smelter
Mr.
Jones has suggested that he would try to keep the Flin Flon copper
smelter open. HudBay has not determined a date for closure of the
smelter, although closure will be necessary prior to 2015 when
government emission targets will make continued operations uneconomic.
Recent movements in energy prices, foreign exchange rates and market
treatment charges have mitigated the adverse economic impact of
operating the smelter. HudBay is, however, investing in the needed
infrastructure to ensure that the company is able to close the smelter
when it is in HudBay's best interests to do so.
Growth by Acquisition
Mr.
Jones has also suggested that he would like to grow HudBay through
acquisitions. A key part of HudBay's strategy during Mr. Jones' previous
tenure as CEO was to grow the company by acquisition, and the HudBay
Board's opinion is that Mr. Jones was unsuccessful in carrying out the
strategy that had been proposed by management and approved by the Board.
Mr. Jones has no experience in conducting mergers and acquisitions, and
there is no reason to believe that he would be any more successful at
this now than he was previously.
Mr. Jones and the SRM Nominees
have indicated that they will not conduct a
share buyback until they have completed a review of HudBay's strategy.
This provides little comfort to HudBay's Board, given its concerns that
the SRM Nominees will be unable to act independently of SRM when SRM
pressures its hand-picked nominees to distribute HudBay's cash through a
major share buyback following such a review. Such a strategy would
leave HudBay undercapitalized and unable to pursue its organic growth
opportunities.
It is apparent that SRM and their nominees made no
effort to develop a strategy for HudBay in the two months following the
announcement of the SRM Nominees. HudBay believes this is because SRM
does not intend to grow HudBay, but rather intends to engage in a major
share buyback that would weaken HudBay financially and jeopardize
HudBay's organic growth opportunities. Facing criticism of their lack of
strategy from HudBay shareholders and independent
observers, SRM and Mr. Jones have hastily concocted a strategy that is
not well considered and hides SRM's true intent, which HudBay believes
is to distribute the company's cash through a share buyback.
The Riskmetrics and Glass Lewis reports
In
its report, Riskmetrics noted that Mr. Voorheis is a paid consultant to
SRM, and has been proposed to be HudBay's chairman if the SRM Nominees
are installed. SRM's proxy circular does not state how much Mr. Voorheis
is being paid by SRM. According to Riskmetrics:
- "... we are
not comfortable with Voorheis being appointed Chairman. A consultant who
is paid by the dissident should not be automatically installed in such
an influential leadership role. We would expect a board of directors,
after due consideration, to independently appoint a chairman in the best
interests of the company and its shareholders." (i)
SRM's
decision to appoint their paid consultant as HudBay's chairman is
entirely consistent with a strategy of obtaining control of HudBay.
HudBay is concerned that Riskmetrics has placed undue faith in the
ability of the SRM Nominees and Mr. Jones to withstand the pressure that
SRM, a well-known activist investor, will apply to them to pursue
strategies that benefit SRM but could be damaging to the interests of
HudBay and its other shareholders.
HudBay urges its shareholders
to carefully consider the issues raised in both the Riskmetrics report
as well as Glass Lewis' report.
In recommending that HudBay shareholders vote AGAINST SRM's resolution, Glass Lewis states that:
-
"We are concerned that the replacement of the entire board is a drastic
step that could disrupt the board and/or management's operations,
depriving the Company of much-needed leadership amid a major
financial downturn." (i)
- "Further, we are concerned that the
Dissident has failed to outline a substantial strategic plan for
improvement at the Company, other than appointing Dissident nominee
(Peter) Jones as CEO. Instead, the Dissident reports that such a plan
could only be finalized after the Dissident nominees were elected to the
board and provided with access to requisite information regarding the
Company. As such, we do not believe the Dissident has provided any
reason to believe that its own strategy would yield better results for
the company's performance than management's current strategy."
-
"In our view, giving the Dissident one or two seats on the board (out of
a total of eight board seats) would be more appropriately aligned with
the Dissident's equity interest in the Company."
- "We believe that incumbent management, with access to more and better
information regarding the company, should be given the benefit of the doubt regarding strategic business directions."
Glass Lewis & Co. concluded that:
-
"...the removal of the entire board at this time could potentially
disturb the Company's operations and have a detrimental impact on
shareholder value. Accordingly, we recommend that shareholders vote
AGAINST this proposal on the Company's BLUE proxy card."
(i)Permission to quote from the Riskmetrics and Glass Lewis reports was neither sought nor obtained.
HudBay
believes that its Board has the experience and the strategy needed to
ensure that HudBay can prosper and maximize shareholder value. HudBay
urges shareholders to vote only the BLUE proxy AGAINST SRM's removal
resolution, and stop SRM from acquiring control of HudBay.
HudBay
will host a conference call on Monday, March 16, 2009 at 10:00
a.m. ET in which Mr. Benner will review HudBay's corporate strategy and
answer questions about his interim appointment (please see details
below):
Conference Call and Webcast
Date: Monday, March 16, 2009
Time: 10:00 a.m. (Eastern Time)
Webcast: www.hudbayminerals.com
Dial in: 416-644-3424 or 800-732-0232
Replay: 416-640-1917 or 877-289-8525
Replay Passcode: 21301062#
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.
Interim CEO Colin K. Benner to Appear on BNN TV
Colin
K. Benner, HudBay's Interim Chief Executive Officer, will be
interviewed on the Canadian Business News Network's (BNN) national
television show "Trading Day" on Monday, March 16, 2009 at 2:20 p.m. ET.
To listen and view this event online, please visit: www.bnn.ca.
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.
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: Email: jvincic@barnesmcinerney.com
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