Hudbay Agrees To Buy Augusta In Revised Friendly C$555 Mln Deal - Update

(RTTNews) - HudBay Minerals Inc. (HBM, HBM.TO) and Augusta Resource Corp. (AZC, AZC.TO) Monday announced that they have entered into a definitive support agreement, under which HudBay lifted its offer for Augusta shares not already owned by the firm. The revised offer represents a total equity value of C$555 million.

Under the revised offer, along with HudBay's initial offer of 0.315 per share, Augusta shareholders will also receive 0.17 of a warrant to acquire a common share of Hudbay for each Augusta common share. The total consideration would now have a value of approximately C$3.56 per Augusta common share, consisting of C$3.24 of share consideration and C$0.32 of warrant consideration.

The new offer represents a 10 percent premium to Hudbay's initial offer, and a 42 percent premium to Augusta's closing share price on the TSX on February 7 prior to Hudbay's initial offer.

The companies noted that the warrants, upon their issuance, 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 on the expiry date of the warrants.

Augusta's Board of Directors unanimously recommended that its shareholders accept the offer. They have also agreed to terminate Augusta's Shareholder Rights Plan to permit shareholders to do so. According to the Board, the revised consideration is fair to Augusta's shareholders.

Hudbay currently owns around 23.06 million common shares of Augusta, representing approximately 16 percent of the stake. In addition, approximately 4 percent of the issued and outstanding common shares of Augusta have been tendered to-date.

Augusta's all of the directors and officers, and certain other Augusta shareholders, who collectively own around 30 percent stake in Augusta, have agreed to tender their shares to the revised offer.

Richard Warke, Augusta's Executive Chairman, said, "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... 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."

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.

In ore-market activity on the NYSE, Augusta shares are gaining $0.14 or 4.70 percent, and trading at $3.12.

On the NYSE, HudBay shares closed Friday's trading at $9.75, up $0.23 or 2.42 percent.