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
TORONTO -- (Business Wire)
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/
Contacts:
Investors
Kingsdale Advisors
Toll-Free (within North
America): 1-888-518-1563
Call Collect (outside North America):
1-416-867-2272
E-mail: contactus@kingsdaleadvisors.com
Media
Sloane
& Company
Dan Zacchei / Joe Germani: 1-212-486-9500
E-mail:
Dzacchei@sloanepr.com
JGermani@sloanepr.com
Source: Waterton Global Resource Management, Inc.
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