Glass Lewis Recommends Hudbay Shareholders Vote for Election of Waterton Nominees on the Blue Proxy Card
Waterton Precious Metals Fund II Cayman, LP ("Waterton Mining LP") and Waterton Mining Parallel Fund Offshore Master, LP ("Waterton Fund II"), each of which are managed by Waterton Global Resource Management, Inc. ("WGRM", and collectively with Waterton Mining LP and Waterton Fund II, "Waterton"), owning in the aggregate 12.09% of the issued and outstanding common shares (the "Shares") of Hudbay Minerals Inc. ("Hudbay" or the "Company") (TSX: HBM) (NYSE: HBM) today announced that leading proxy advisory firm Glass, Lewis & Co. ("Glass Lewis") has recommended that shareholders vote FOR the election of Waterton's independent, highly-qualified director nominees ? Richard Nesbitt, Daniel Muniz Quintanilla and David Smith ? to the Hudbay Board of Directors (the "Board") at the Annual and Special Meeting of Shareholders (the "Meeting").
In reaching this conclusion, Glass Lewis conducted a careful assessment of Waterton's arguments and agreed that the Company would benefit from a minority board refreshment that would add "governance, strategic and financial oversight at a particularly critical juncture for the Company."1 Glass Lewis noted that Waterton's director nominees Richard Nesbitt, Daniel Muniz Quintanilla and David Smith have the required skills, perspectives and expertise to bring value to the Hudbay boardroom. Specifically, Glass Lewis said the following:
- "We are ultimately inclined to suggest the Dissident's core case - i.e. that Hudbay has a value destructive capital management and project development track record and a disconcerting willingness to employ starkly regressive and misleading tactics to deter shareholder action -- holds water here."
- "Indeed, recent and conspicuously-timed rebound notwithstanding, we believe the bulk of Hudbay's performance over the last several years demonstrates an objectively substandard commitment to preserving and improving shareholder value."
- "[A] closer look suggests all is not well at Hudbay...a broader review of the Company's returns suggests Hudbay has continually and uniformly lagged its closest industry peers across substantially any unaffected measurement period, including those falling after completion of Constancia. This trend only appears to invert across measurement periods falling after initiation of Waterton's campaign, an unambiguously atypical swing which management nevertheless attempts to frame as substantially or entirely attributable to Hudbay's own efforts."
Isser Elishis, Chief Investment Officer of Waterton Global Resource Management, commented: "We are pleased that Glass Lewis has supported our case for change at Hudbay and has recommended that shareholders vote for the election of Richard Nesbitt, Daniel Muniz Quintanilla and David Smith to the Hudbay Board. Our objective is to ensure Hudbay is well-positioned to deliver long-term shareholder value. Given the Company's substantial performance, governance and strategic issues cited by Glass Lewis, we continue to believe that the addition of all four of our independent nominees ? including Peter Kukielski given his vast mining experience and track record of success ? would best achieve this goal."
In addition, Glass Lewis noted:
- "Just as troubling is Hudbay's tack since Waterton's efforts became public... disconcertingly, Hudbay also levied what appear to be accusations of market manipulation against Waterton before later withdrawing those claims, in each case without any explanation or evidence for the benefit of other investors attempting to arrive at an informed decision here."
- "[W]e believe several of the claims issued by the Company against certain of the Dissident candidates are wholly misleading and frequently lacking in fundamental context."
- "...we believe investors should hold the following incumbent directors accountable: (i) Alan Hibben, as the longest serving board member, the chairman of the board and the chair of the governance and nominating committee; and (ii) Kenneth Stowe, as the next longest serving board member."
Waterton urges shareholders to vote for the Waterton Nominees on the BLUE form of proxy and/or BLUE voting instruction form by 5:00 p.m. (Eastern time) on Thursday, May 2, 2019. Shareholders willing to express their support for the Waterton Nominees may contact Kingsdale Advisors, our strategic shareholder advisor and proxy solicitation agent, at 1-888-518-1563 toll-free in North America, or at 416-867-2272 outside of North America (collect calls accepted), or by email at [email protected].
Visit www.NewHudbay.com for additional information.
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.
Legal Notices and Disclaimers
The data, information and opinions contained or referenced herein (collectively, the "Information") is for general informational purposes only for the holders of Shares ("Shareholders") in order to provide the views of Waterton regarding certain changes we are requesting to the composition of the Board, and other matters which Waterton believes to be of concern to Shareholders described herein. The Information is not tailored to specific investment objectives, the financial situation, suitability, or particular need of any specific person(s) who may receive the Information, and should not be taken as advice in considering the merits of any investment decision. The views expressed in the Information represent the views and opinions of Waterton, whose opinions may change at any time and which are based on analyses of Waterton and its advisors. Unless otherwise indicated, the Information has been derived or obtained from public disclosure and filings with respect to and/or made by Hudbay and other issuers that we consider to be comparable to Hudbay, and from other third party reports (see "Legal Notices and Disclaimers - Disclaimer Respecting Publicly Sourced Information" in Waterton's information circular dated April 15, 2019 (the "Waterton Circular"), a copy of which is available on SEDAR at www.sedar.com or on www.newhudbay.com).
The Information contains forward-looking statements or forward-looking information within the meaning of applicable securities laws (collectively, "forward-looking statements"), including, without limitation, Waterton's and Hudbay's respective priorities, plans and strategies for Hudbay and certain members of Hudbay's operational, compensation and other noted peer groups' anticipated financial and operating performance and business prospects. All statements and information, other than statements of historical fact, included herein are forward-looking statements, including, without limitation, statements regarding activities, events or developments that Waterton expects or anticipates may occur in the future. Certain forward-looking statements contained herein may be considered to be future-oriented financial information or a financial outlook for the purposes of applicable securities laws. 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 known and unknown risks and uncertainties, including but not limited to those set forth in the Waterton Circular under the heading "Legal Notices and Disclaimers ? Forward-Looking Statements" and 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 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. Unless expressly stated otherwise, the forward-looking statements included herein are made as of the date hereof and Waterton disclaims any obligation to publicly update such forward-looking statements, except as required by applicable law.
1 Permission to quote Glass Lewis was neither sought nor obtained. Emphasis added.
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