Hecla Mining Company (NYSE:HL) today announced that it will make
a takeover bid for all of the outstanding shares of Dolly Varden
Silver Corporation not owned by Hecla and its affiliates for C$0.69
cash per share. The bid will be subject to a minimum tender
condition that more than 50% of the shares are tendered, excluding
shares owned by Hecla and its affiliates.
This offer reflects a premium of approximately 55% based on
Dolly Varden’s closing price on June 24, 2016, and a premium of
approximately 97% based on the volume-weighted average price of the
Dolly Varden shares on the TSX-V for the 20 trading days ending
June 24, 2016.
“While we believe that Dolly Varden can one day be a significant
silver producer, we are very concerned with the current Board’s
value destruction for shareholders,” said Phillips S. Baker, Jr.,
Hecla’s President and Chief Executive Officer.
“These directors are not acting in shareholders’ best interests
with a new loan arrangement that causes substantial dilution at a
low share price. Their plan starts with issuing warrants with an
'option value' of C$0.275 each and an exercise price of C$0.30,
which is well below the current share price and our offer price.
The warrants are issued in exchange for a loan whose maturity is
only three months longer than the existing loan and adds little to
the treasury. The Dolly Varden Board is proceeding with this
arrangement despite Hecla’s expressed willingness months ago to
extend the existing loan and a formal offer that, compared to the
proposed new loan, extends the maturity a year longer, provides a
lower interest rate and two times more new funding. To protect
ourselves and other shareholders, we are offering to buy Dolly
Varden shares for cash at C$0.69. If we acquire all shares we
expect to spend about $12 million.”
Hecla also announced that it has entered into support agreements
with shareholders (the “Supporting Shareholders”) who collectively
hold 2,500,000 Dolly Varden shares and 1,250,000 Dolly Varden
warrants.
Hecla and the shareholders who support the bid hold in aggregate
5,120,291 shares and 2,500,000 warrants, being approximately 34.4%
of Dolly Varden’s shares on a fully diluted basis. Each warrant
entitles the holder to acquire one additional share at a price of
$0.30 per share and is exercisable for a period ending September
30, 2018. The Supporting Shareholders have agreed to tender their
shares and warrants into Hecla’s takeover bid, and to otherwise
support the takeover bid.
Hecla, through its wholly owned subsidiary Hecla Canada Ltd.,
controls 2,620,291 shares and 1,250,000 warrants. Assuming exercise
only of the warrants held by Hecla Canada, Hecla owns and controls
3,870,291 Dolly Varden shares, or approximately 19.8% of the shares
calculated on a partially diluted basis.
Hecla has notified the TSX-V of its concerns and requested that
the Exchange not approve the issuance of warrants to Dolly Varden’s
proposed new lenders. Shareholders who share Hecla’s concerns with
this financing package should contact the Exchange.
It is within the power of the Board of Directors of Dolly Varden
to significantly shorten the minimum bid period, allowing
shareholders to receive the benefits of Hecla’s offer in only 35
days. Shareholders are encouraged to contact Dolly Varden and to
urge management and the Board to allow Hecla’s takeover bid to
proceed in the minimum time frame allowed.
Hecla’s takeover bid for Dolly Varden has been approved by
Hecla’s Board of Directors and will not require approval by its
shareholders. Hecla’s takeover bid will be subject to a condition
that there be validly deposited and not withdrawn such number of
Dolly Varden shares which, excluding securities beneficially owned
or over which control or direction is exercised by Hecla or its
affiliates or any person acting jointly or in concert with Hecla,
constitutes more than 50% of Dolly Varden’s outstanding shares. The
bid will also be subject to certain other customary conditions.
Important Notice
This press release does not constitute an offer to buy or the
solicitation of an offer to sell any securities of Dolly
Varden.
About Hecla
Founded in 1891, Hecla Mining Company (NYSE:HL) is a leading
low-cost U.S. silver producer with operating mines in Alaska, Idaho
and Mexico, and is a growing gold producer with an operating mine
in Quebec, Canada. The Company also has exploration and
pre-development properties in six world-class silver and gold
mining districts in the U.S., Canada, and Mexico, and an
exploration office and investments in early-stage silver
exploration projects in Canada.
Cautionary Note Regarding Forward-Looking Statements
Statements made or information provided in this news release
that are not historical facts, such as anticipated production,
sales of assets, exploration results and plans, costs, and prices
or sales performance are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 and
"forward-looking information" within the meaning of Canadian
securities laws. Words such as “may,” “will,” “should,” “expects,”
“intends,” “projects,” “believes,” “estimates,” “targets,”
“anticipates” and similar expressions are used to identify these
forward-looking statements. Forward-looking statements involve a
number of risks and uncertainties that could cause actual results
to differ materially from those projected, anticipated, expected or
implied. These risks and uncertainties include, but are not limited
to, metals price volatility, volatility of metals production and
costs, litigation, regulatory and environmental risks, operating
risks, project development risks, political risks, labor issues,
ability to raise financing and exploration risks and results. Refer
to the company's Form 10-K and 10-Q reports for a more detailed
discussion of factors that may impact expected future results. The
company undertakes no obligation and has no intention of updating
forward-looking statements other than as may be required by
law.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160627006234/en/
Hecla Mining CompanyMike Westerlund, 800-HECLA91
(800-432-5291)Vice President - Investor
Relationshmc-info@hecla-mining.com
Hecla Mining (NYSE:HL)
Historical Stock Chart
From Apr 2024 to May 2024
Hecla Mining (NYSE:HL)
Historical Stock Chart
From May 2023 to May 2024