HudBay Minerals Inc. and Rosemont Copper’s owner Augusta Resource Corporation announced today that Hudbay will purchase all of the issued and outstanding common shares of Augusta not already owned by Hudbay.
According to a statement issued by Hudbay, 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 has 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.