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.
- 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:
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.
- Having Trusted Leadership
- 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:
The clear objective is to achieve long-term share price
- 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.
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.
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.
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.