HudBay, Lundin suffer reproach for lack of transparency
HudBay Minerals Inc(C:HBM)
Shares Issued 152,995,125
Last Close12/4/2008 $3.40
Friday December 05 2008 - News Release
Also Lundin Mining Corp (C:LUN)News Release
Mr. Stefan Prelog of Corriente Master reports
CORRIENTEMASTER FUND DEMANDS RESPONSE TO COMPLAINTS ABOUT HUDBAY DEAL WITHLUNDIN MINING CORPORATION;CONCERNED ABOUT CONFLICTS OF INTEREST,INFLATED VALUE, LACK OFSHAREHOLDER PARTICIPATION
Corriente MasterFund LP has sent a second letter to the board ofdirectors of HudBayMinerals Inc. demanding that the board reply toits numerous concernsrelating to the proposed transaction with LundinMiningCorp.
Theletter sent to HudBay's board outlines why Corriente feels theproposedtransaction is damaging to HudBay's shareholders and questionsthecircumstances surrounding the transaction. Corriente states that ithas yetto receive a reply to a letter sent to HudBay's directors onNov. 24,2008, which also outlined objections to the Lundin deal.
Oneof the primary concerns cited in the letter is why HudBay did notinsiston a shareholder vote before proceeding with the merger. In theletter,Corriente states that, "It is appalling that HudBay management seekstoput its shareholders in the position of having to look togovernmentalagencies or exchanges to properly govern the company andprotect theirinterests as shareholders." Corriente also seeks anexplanation as to how andwhen the board decided on the effectivepurchase price/exchange price ofLundin's shares, stating that there is"no tenable basis" on which the boardcould approve a transaction thatvalued Lundin's common stock at a 115-per-centpremium to the marketprice at the time of the announcement. Corrienterequests an explanationas to why the board would agree to loan Lundin$136-million of its cash,effectively acting as a lender of last resort toLundin, regardless ofwhether the transaction is consummated. Corrientestates that, "The factthat there are common directors, a common adviser,close personalrelationships and common working histories between thecompanies'management teams seriously calls into question the legitimacy of,andjudgment used in agreeing to, such a loan."
Finally, Corrientereiterates its concern that HudBay retained GMPSecurities LP as itsfinancial adviser on the transaction, notingGMP's apparent conflicts ofinterest in the transaction. Corriente notes thatGMP represented HudBayin its acquisition of Skye Resources Inc. earlier thisyear, atransaction Corriente describes as "a failure for the company,"andrepresented Lundin in its acquisition of a stake in the Tenke miningoperationlocated in the Republic of the Congo, which Corriente believeswas highlyovervalued by GMP.
Corriente requires a response to its complaints by the close of businesson Monday, Dec. 8.
CorrienteMaster Fund is a global macrohedge fund managed byCorriente AdvisorsLLC, a Securities Exchange Commission-registered investment adviser.
© 2008 Canjex Publishing Ltd.