Activist Plans to Push for Board Overhaul at Hudbay

(Bloomberg) -- One of the largest investors in Hudbay Minerals Inc. plans to nominate a majority slate of directors at the company’s annual general meeting and propose a new chief executive officer to improve performance.

Waterton Global Resource Management, which owns 10 percent of Hudbay Minerals, met Chairman Alan Hibben and director Sarah Kavanagh in November to discuss replacing board members, according to a letter to other shareholders reviewed by Bloomberg. Those talks have hit an impasse, the letter shows.

The investment firm accused Hudbay Minerals of demonstrating a “pattern of systemic bad faith and lack of engagement with shareholders.”

“We believe that the company’s behavior stems from a culture of toxic, value destructive entrenchment at both the board and C-suite levels,” Waterton’s Chief Investment Officer Isser Elishis said in the letter dated Dec. 13.

Elishis also said Hibben exerts a “troubling” level of influence over the company, and that other shareholders have told him they have similar concerns.

A representative for Toronto-based Hudbay Minerals didn’t respond to requests for comment.

Waterton, a long-time mining investor, has never run a proxy fight before. Hudbay Minerals shares are down 42 percent this year, despite a rally in November after it reported strong third quarter earnings. Elishis said it is only the third time in the past 11 quarters since CEO Alan Hair was appointed that the company has not missed analysts’ estimates.

Shares closed at C$6.51 on Wednesday, valuing Hudbay Minerals at C$1.7 billion ($1.3 billion).

Waterton is finalizing the slate of directors that it plans to nominate at the annual meeting, which it expects to be held in May. Waterton will not be seeking a seat on the board, instead choosing independent nominees with relevant experience. The firm is also recruiting a potential replacement CEO, Elishis said.

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