Hudbay and Augusta Agree to Friendly Acquisition
TORONTO, ONTARIO--(Marketwired - Jun 23, 2014) - HudBay Minerals
Inc. ("Hudbay") (TSX:HBM)(NYSE:HBM) and Augusta Resource
Corporation ("Augusta") (TSX:AZC)(NYSEMKT:AZC) today announced that
they have entered into a definitive support agreement pursuant to
which Hudbay has agreed to increase the consideration that will be
received by Augusta shareholders under Hudbay's offer to purchase
all of the issued and outstanding common shares of Augusta not
already owned by Hudbay (the "Revised Offer"). Under the Revised
Offer, in addition to 0.315 of a Hudbay common share as provided in
Hudbay's original offer, Augusta shareholders will also receive
0.17 of a warrant to acquire a common share of Hudbay for each
Augusta common share, representing consideration with a value of
approximately C$3.56 per Augusta common share. The Revised Offer
represents a total equity value of C$555 million based on 100% of
the fully-diluted, in-the-money common shares of Augusta (including
those already owned by Hudbay). Augusta's Board of Directors is
unanimously recommending that Augusta shareholders accept the
Revised Offer and has agreed to terminate Augusta's Shareholder
Rights Plan to permit shareholders to do so.
David Garofalo, President and Chief Executive Officer of Hudbay,
said, "We are pleased to have reached agreement with the board and
management of Augusta as we strongly believe in the merits of this
transaction and its benefits to both companies' shareholders. We
look forward to working with the board and management of Augusta to
bring this transaction to a conclusion and to advancing the
Rosemont Project within Hudbay."
"After a thorough process to consider all of our alternatives,
we are pleased to have agreed on a mutually beneficial transaction
representing a successful conclusion to our value maximizing
process," said Richard Warke, Augusta's Executive Chairman. "We
believe this is a fair transaction for Augusta shareholders. Our
agreement with Hudbay provides Augusta shareholders with an
attractive premium for their shares and a stake in a growing
intermediate base metals mining company with a portfolio of
producing mines and development projects, including the world-class
Rosemont Project."
Terms of the Revised Offer
Under the Revised Offer, Augusta's shareholders will receive, in
addition to 0.315 of a Hudbay common share as provided in Hudbay's
original offer, 0.17 of a warrant to acquire a common share of
Hudbay for each Augusta common share. Based on Hudbay's closing
share price on the TSX on June 20, 2014, the Revised Offer
represents consideration of approximately C$3.56 per Augusta common
share, consisting of C$3.24 of share consideration and C$0.32 of
warrant consideration. This is a 10% premium to Hudbay's initial
offer of 0.315 of a Hudbay common share for each Augusta common
share and a 42% premium to Augusta's closing share price on the TSX
on February 7, 2014 prior to Hudbay's initial offer.
Upon their issuance, the warrants will have an initial term of 4
years, and each full warrant will be exercisable for one common
share of Hudbay at an exercise price of C$15.00 on the expiry date
of the warrants. Hudbay, may, at its option, upon written notice to
the warrant holders, settle the exercise of warrants for the
in-the-money value, in cash, shares or a combination thereof.
Hudbay will make an application to list the warrants on the Toronto
Stock Exchange. The terms of the warrants will be more fully
described in a Notice of Variation and Extension that will be sent
to Augusta shareholders.
The Board of Directors of Augusta has unanimously determined,
after consultation with its financial and legal advisors, that the
consideration under the Revised Offer is fair to Augusta's
shareholders, that it would be in the best interests of Augusta to
support and facilitate the Revised Offer and to recommend that
Augusta shareholders accept the Revised Offer. Augusta's financial
advisors, Scotia Capital Inc. and TD Securities Inc., have each
provided opinions to the Augusta Board of Directors that, as of
June 22, 2014 and subject to the assumptions, limitations and
qualifications on which the opinions are based, the consideration
to be received under the Revised Offer is fair, from a financial
point of view, to Augusta's shareholders other than Hudbay and its
affiliates. The Augusta Board of Directors will issue an amended
Directors' Circular in connection with the Revised Offer setting
forth the details of its recommendation and certain related
matters.
All of the directors and officers of Augusta and certain other
Augusta shareholders have entered into agreements with Hudbay
pursuant to which, among other things, they have agreed to tender
to the Revised Offer all of the common shares of Augusta owned or
controlled by them (including common shares issuable on the
exercise of stock options and other convertible instruments). Those
shares represent approximately 30% of the common shares of Augusta
on a fully-diluted basis. Hudbay owns 23,058,585 common shares of
Augusta, representing approximately 16% of the issued and
outstanding common shares of Augusta. In addition, approximately 4%
of the issued and outstanding common shares of Augusta have been
tendered to-date.
Under the terms of the support agreement, Augusta has agreed,
among other things, to a customary non-solicitation provision, to
grant Hudbay a right to match any alternative transaction proposal
made by another party, and to pay a fee of C$20 million to Hudbay
under certain circumstances if a transaction is not completed.
The full details of the Revised Offer will be set out in the
Revised Offer documents, which will be mailed to Augusta
shareholders and filed with the Canadian securities regulatory
authorities no later than July 7, 2014. The documents will also be
available on SEDAR under Augusta's profile at www.sedar.com. Upon
filing, the Revised Offer will be open for no fewer than 10
business days and, following any take up of Augusta shares, Hudbay
will then further extend its offer for at least an additional 10
days in order to allow any remaining Augusta shareholders to tender
to the Revised Offer.
Hudbay has 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 or Augusta's Tender Offer
Solicitation/Recommendation Statement on Schedule 14D-9, as
amended. 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.
How to Tender
Augusta shareholders that have already deposited to the Offer
should not withdraw their shares. Augusta shareholders are
encouraged to read the full details of the Offer set forth in the
Offer documents, which contain detailed instructions on how Augusta
shareholders can tender their Augusta common shares to the Offer.
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.
Advisors, Counsel and Information Agent
BMO Capital Markets and GMP Securities L.P. are acting as
financial advisors to Hudbay and Goodmans LLP and Milbank, Tweed,
Hadley & McCloy LLP are acting as legal counsel. Scotia Capital
Inc. and TD Securities Inc. are acting as financial advisors to
Augusta and Davies Ward Phillips & Vineberg LLP and Cravath,
Swaine & Moore LLP are acting as legal counsel.
Kingsdale Shareholder Services Inc. has been retained as
information agent for the Offer. For additional information
including assistance in depositing Augusta Shares to the Offer,
Augusta shareholders should contact Kingsdale 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.
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.
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.
About Augusta
Augusta (TSX:AZC)(NYSEMKT:AZC) is a base metals company focused
on advancing the Rosemont Copper deposit near Tucson, Arizona.
Rosemont hosts a large copper/molybdenum reserve that would account
for about 10% of U.S. copper output once in production. Further
information about Augusta can be found on
www.augustaresource.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 |
Cautionary Note Regarding Forward Looking
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, statements with
respect to the anticipated timing, mechanics, completion and
settlement of the Revised Offer, including the permitting,
development and financing of the Rosemont project. 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; no significant and
continuing adverse changes in general economic conditions or
conditions in the financial markets; that all required regulatory
and governmental approvals for the Revised Offer will be obtained
and all other conditions to completion of the Revised Offer will be
satisfied or waived, the completion of the Revised Offer and any
subsequent transaction.
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 securities received
as consideration under the Revised Offer and the impact of such
issuance on the market price of the Hudbay common shares and
warrants, the development of the Rosemont project not occurring as
planned, the accuracy of Augusta's public disclosure upon which the
Revised Offer is predicated, Augusta becoming a minority-owned or
majority-owned subsidiary of Hudbay after consummation of the
Revised Offer, the possibility that Hudbay may remain a minority
shareholder of Augusta after consummation of the Revised Offer, as
well as the risks discussed under the heading "Risk Factors" in the
Offer documents and other documents filed (or to be 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.
HudBay Minerals Inc.Investor inquiries:Candace BruleDirector,
Investor Relations(416)
814-4387candace.brule@hudbayminerals.comAugusta Resource
CorporationLetitia CornacchiaVice President, Investor Relations
andCorporate Communications(416)
860-6310lcornacchia@augustaresource.comMedia inquiries:Scott
BrubacherDirector, Corporate Communications(416)
814-4373scott.brubacher@hudbayminerals.comIan HamiltonDFH Public
Affairs(416) 206-0118 x222 or (905)
399-6591ian@dfhpublicaffairs.com
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