Hudbay Announces Final Extension of Offer for Augusta
TORONTO, ONTARIO--(Marketwired - Mar 31, 2014) - HudBay Minerals
Inc. ("Hudbay" or the "company") (TSX:HBM)(NYSE:HBM) announced
today it is extending its offer to acquire all of the outstanding
common shares of Augusta Resource Corporation ("Augusta") not
already owned by Hudbay for consideration per Augusta share of
0.315 of a Hudbay common share (the "Offer"). The Offer will now be
open for acceptance until 5:00 p.m. (Toronto time) on May 5, 2014
(the "Expiry Time").
Hudbay will not extend the Offer beyond May 5, 2014 unless, at
or by that date, the remaining conditions to the Offer have been
satisfied or waived, including the condition that Augusta's
shareholder rights plan has been waived, invalidated or
cease-traded. Hudbay will be applying to the British Columbia
Securities Commission to cease trade Augusta's shareholder rights
plan prior to the Expiry Time.
"Despite Augusta having discussed the Rosemont project with
interested parties since 2010 and 50 days having elapsed since we
announced our intention to make our offer, Augusta has been unable
to present its shareholders with a superior alternative to our
bid," said David Garofalo, president and chief executive officer of
Hudbay. "Augusta's most recent announcement is nothing more than
confirmation that its strategic review process has failed and that
the board of directors of Augusta is seeking to continue to deny
shareholder choice."
Hudbay believes that the Offer represents full and fair value
and is the best alternative available to Augusta shareholders. As
long as Augusta continues as a stand-alone entity, its shareholders
face significant risk of value erosion and dilution due to
uncertain permitting timelines and critical near term financial
pressures.
- Augusta's Strategic Review Process Has Failed: Augusta has not
presented its shareholders with any alternative transactions to
Hudbay's Offer, despite the Offer having been announced 50 days ago
and claims by Augusta that parties started conducting due diligence
on Rosemont prior to Hudbay launching its Offer. The
signing of a confidentiality agreement is not an indication of a
willingness to undertake a transaction that would be more
beneficial to Augusta shareholders than the Offer, and Augusta has
not provided any evidence that there is any reasonable prospect of
such a transaction.
- Augusta's Scheduling of Site Visits is a Stalling Tactic: The
length of additional time Augusta is anticipating to conclude its
strategic review process is nothing more than a stalling tactic. It
is unclear why site visits to a greenfield development project 30
miles from Tucson, Arizona would require three to four weeks and,
more importantly, why site visits have not already occurred if
interested bidders truly exist. If Augusta believed that its
strategic review process would result in an alternative
transaction, it would not need to continue to rely on its rights
plan as a means of denying its shareholders the ability to choose
to accept Hudbay's Offer.
- Augusta's Rights Plan is an Attempt to Deny Shareholder Choice:
Augusta's announcement, almost 50 days after the commencement of
the Offer, that it will put Augusta's shareholder rights plan to a
vote at its annual meeting on May 9, 2014 is a further attempt to
allow a group of current and former insiders to deny shareholder
choice and suggests that Augusta's board doesn't expect to have any
alternative transaction to Hudbay's Offer almost 90 days after the
Offer was commenced. At a special meeting of shareholders on
October 17, 2013, the rights plan was approved by holders of only
46% of the outstanding shares of Augusta, which would imply
approval by only 19% of holders of Augusta's outstanding shares if
insiders and former insiders who voted in favour are excluded. In
attempting to have another vote on the rights plan, Augusta is
acknowledging that the prior vote does not indicate that
shareholders support the application of the rights plan in the
context of the Offer, and Augusta's insiders are continuing to seek
to entrench themselves and deny shareholders the opportunity to
accept the Offer. If Augusta's Board truly wanted to put "power
directly in [shareholders'] hands", it would allow shareholders the
opportunity to tender to the Offer.
- Augusta's Current Share Price Likely to Fall in the Absence of
the Offer or a Superior Proposal: Hudbay notes that since the
Offer, Augusta has outperformed its peers by 30%. This is not
sustainable; the reality is that Augusta's share price is likely to
fall in the absence of the Offer or a superior proposal.
Furthermore, any Augusta shareholder wishing to sell a substantial
number of shares at Augusta's bid-affected price prior to the
expiry of the Offer would be constrained by the lack of market
liquidity.
"The stalling tactics of Augusta's board of directors do nothing
to create value for Augusta's shareholders and, similar to recent
insider equity issuances, are contrary to the Augusta board's claim
that it respects the rights and interests of all of Augusta's
shareholders," said Mr. Garofalo. "The shareholders of Augusta
deserve the opportunity to be able to make their own choice about
the Offer."
How to Tender
If you have already deposited your Augusta shares to the Offer
you should not withdraw your shares. Hudbay encourages Augusta
shareholders to read the full details of the Offer set forth in the
takeover bid circular and accompanying offer documents, as amended,
including the notices of extension and variation mailed to Augusta
shareholders in accordance with applicable securities laws
(collectively, the "Offer Documents"), which contain detailed
instructions on how Augusta shareholders can tender their Augusta
common shares to the Offer. The Offer Documents have been filed
with the Canadian and U.S. securities regulatory authorities and
are available for review on their respective websites at
www.sedar.com and www.sec.gov.
For assistance in depositing Augusta common shares to the Offer,
Augusta shareholders should contact the depositary for the Offer,
Equity Financial Trust Company at 1-866-393-4891 (North American
Toll Free) or 416-361-0930 ext. 205 (outside North America), or by
email at corporateactions@equityfinancialtrust.com or the
Information Agent for the Offer, Kingsdale Shareholder Services at
1-866-229-8874 (North American Toll Free Number) or 1-416-867-2272
(outside North America), or by email at
contactus@kingsdaleshareholder.com.
About the Offer
The Offer is for all of the issued and outstanding common shares
of Augusta not already owned by Hudbay, including any common shares
of Augusta that may become issued and outstanding after the date of
the Offer but before 5:00 p.m. (Toronto time) on May 5, 2014 upon
the exercise, exchange or conversion of any securities of Augusta
exercisable or exchangeable for, convertible into or otherwise
conferring a right to acquire, any common shares of Augusta or
other securities of Augusta, together with the associated rights
issued under Augusta's shareholder rights plan agreement dated as
of April 18, 2013 between Augusta and Computershare Investor
Services Inc. Hudbay currently owns 23,058,585 common shares of
Augusta, representing approximately 16% of the issued and
outstanding common shares of Augusta. In accordance with United
States tender offer rules, Hudbay discloses that as of 9:00 a.m. on
March 31, 2014, 513,115 Augusta shares had been tendered to and not
withdrawn from the Offer.
The Offer is open for acceptance until 5:00 p.m. (Toronto time)
on May 5, 2014. The Offer is subject to customary conditions,
including no material adverse change in Augusta and Augusta's
shareholder rights plan being waived, invalidated or cease-traded.
The Offer is not subject to the approval of Hudbay's shareholders,
is not subject to any financing or due diligence conditions and is
not subject to a minimum number of shares having been deposited and
not withdrawn. Hudbay has received early termination of the waiting
period under the Hart-Scott-Rodino Act in the United States, and
conditional TSX and NYSE approvals. No Augusta shares can be taken
up under the Offer until the remaining conditions have been
satisfied or waived.
The full details of the Offer are set out in the Offer
Documents, which Hudbay has filed with the Canadian securities
regulatory authorities. Hudbay has also filed a registration
statement on Form F-10 (as amended, the "Registration Statement"),
which contains a prospectus relating to the Offer (the
"Prospectus"), and a tender offer statement on Schedule TO (as
amended, the "Schedule TO") with the Securities and Exchange
Commission (the "SEC"). This news release is not a substitute for
the Offer Documents, the Prospectus, the Registration Statement or
the Schedule TO. AUGUSTA SHAREHOLDERS AND OTHER INTERESTED PARTIES
ARE URGED TO READ THESE DOCUMENTS, ALL DOCUMENTS INCORPORATED BY
REFERENCE, ALL OTHER APPLICABLE DOCUMENTS AND ANY AMENDMENTS OR
SUPPLEMENTS TO ANY SUCH DOCUMENTS WHEN THEY BECOME AVAILABLE,
BECAUSE EACH WILL CONTAIN IMPORTANT INFORMATION ABOUT HUDBAY,
AUGUSTA AND THE OFFER. Materials filed with the Canadian securities
regulatory authorities are available electronically without charge
at www.sedar.com. Materials filed with the SEC are available
electronically without charge at the SEC's website at www.sec.gov.
All such materials may also be obtained without charge at Hudbay's
website, www.hudbayminerals.com or by directing a written or oral
request to the Information Agent for the Offer, Kingsdale
Shareholder Services at 1-866-229-8874 (North American Toll Free
Number) or 1-416-867-2272 (outside North America), or by email at
contactus@kingsdaleshareholder.com or to the Vice President, Legal
and Corporate Secretary of Hudbay at 25 York Street, Suite 800,
Toronto, Ontario, telephone (416) 362-8181.
Important Notice
This news release does not constitute an offer to buy or the
solicitation of an offer to sell any of the securities of Hudbay or
Augusta.
Cautionary Note Regarding Forward Looking Statements
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 includes
information that relates to, among other things, our objectives,
strategies, and intentions and future financial and operating
performance and prospects, statements with respect to the
anticipated timing, mechanics, completion and settlement of the
Offer, including our intention to apply to the British Columbia
Securities Commission to cease trade Augusta's shareholder rights
plan, the prospects of Augusta's strategic review process, the
market for the common shares of Hudbay, the value of the common
shares of Hudbay received as consideration under the Offer,
Hudbay's anticipated production, the permitting, development and
financing of the Rosemont Project, reasons to accept the Offer, and
the purpose of the Offer. 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 material factors or assumptions
that we identified and were applied by us in drawing conclusions or
making forecasts or projections set out in the forward looking
information include, but are not limited to, the accuracy of
Augusta's public disclosure; the execution of our business and
growth strategies, including the success of our strategic
investments and initiatives; the availability of financing for our
exploration and development projects and activities; the ability to
complete project targets on time and on budget and other events
that may affect our ability to develop our projects; no significant
and continuing adverse changes in general economic conditions or
conditions in the financial markets; that all conditions to
completion of the Offer will be satisfied or waived.
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, the market value of the Hudbay shares received as
consideration under the Offer and the impact of such issuance on
the market price of the Hudbay shares, the development of the
Rosemont project not occurring as planned, the exercising of
dissent and appraisal rights by Augusta shareholders should a
compulsory acquisition or subsequent acquisition transaction be
undertaken, the reduced trading liquidity of Augusta shares not
deposited under the Offer, Augusta becoming a minority-owned or
majority-owned subsidiary of Hudbay after consummation of the
Offer, the possibility that Hudbay may remain a minority
shareholder of Augusta after consummation of the Offer without the
ability to control the management or direction of Augusta, the
inaccuracy of Augusta's public disclosure upon which the Offer is
predicated, the triggering of change of control provisions in
Augusta's agreements leading to adverse consequences, risks
generally associated with the mining industry, such as economic
factors (including future commodity prices, currency fluctuations,
energy prices and general cost escalation), uncertainties related
to the development and operation of Hudbay's projects (including
the impact on project cost and schedule of construction delays and
unforeseen risks and other factors beyond our control), depletion
of Hudbay's reserves, risks related to political or social unrest
or change and those in respect of aboriginal and community
relations and title claims, operational risks and hazards,
including unanticipated environmental, industrial and geological
events and developments and the inability to insure against all
risks, failure of plant, equipment, processes, transportation and
other infrastructure to operate as anticipated, compliance with
government and environmental regulations, including permitting
requirements and anti-bribery legislation, dependence on key
personnel and employee relations, volatile financial markets that
may affect Hudbay's ability to obtain financing on acceptable
terms, uncertainties related to the geology, continuity, grade and
estimates of mineral reserves and resources and the potential for
variations in grade and recovery rates, uncertain costs of
reclamation activities, Hudbay's ability to comply with its pension
and other post-retirement obligations, Hudbay's ability to abide by
the covenants in its debt instruments, as well as the risks
discussed under the heading "Risk Factors" in the Offer Documents
and other documents filed with Canadian and U.S. securities
regulatory authorities. 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, the reader should not place undue reliance 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:HBM)(NYSE:HBM) is a Canadian integrated mining
company with assets in North and South America principally focused
on the discovery, production and marketing of base and precious
metals. Hudbay's objective is to maximize shareholder value through
efficient operations, organic growth and accretive acquisitions,
while maintaining its financial strength. A member of the
S&P/TSX Composite Index and the S&P/TSX Global Mining
Index, Hudbay is committed to high standards of corporate
governance and sustainability. Further information about Hudbay can
be found on www.hudbayminerals.com.
For shareholder inquiries, please contact Kingsdale Shareholder
Services
1-866-229-8874 (North American Toll Free Number) |
1-416-867-2272 (Outside North America) |
contactus@kingsdaleshareholder.com |
HudBay Minerals Inc.Candace BruleDirector, Investor
Relations(416) 814-4387candace.brule@hudbayminerals.comHudBay
Minerals Inc. - Media InquiriesScott BrubacherDirector, Corporate
Communications(416)
814-4373scott.brubacher@hudbayminerals.comwww.hudbayminerals.com
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