The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
If the proposed combination of the companies fails as expected, Lundin Mining is demanding HudBay Minerals pay out a $2.5 million break fee. Lundin said it believes it has the right to immediately terminate a November agreement to be taken over by HudBay, and thus collect the seven-figure stipend. But the company said in a news release that it is prepared to postpone this right as long as HudBay "uses its best efforts" to obtain shareholder approval for the deal by March 31. If shareholder approval is not secured by then, or if Lundin believes HudBay is not doing all it can to obtain approval, Lundin said it intends to exercise its right to quash the deal. Lundin has forwarded a notice of breach to HudBay, and the HBMS parent company was quick to respond. "HudBay disagrees with the recently received notice of breach from Lundin Mining regarding alleged breaches of certain terms of the arrangement agreement entered into in connection with the proposed acquisition of Lundin Mining," said the company in a news release. HudBay announced it has moved up a shareholder vote on the takeover to March 25 and will not challenge an Ontario Securities Commission decision that forced the vote. The proposed $488-million all-stock takeover has generated much opposition since it was announced. Many see it as a lopsided deal in Lundin's favour, particularly when contrasting Lundin's bank account with the $800 million-plus stocked away by HudBay. Another sore point is that Lundin shareholders would reportedly control about half of the merged company. But HudBay CEO Allen Palmiere has seen vast potential in the deal, which would bring mines in Europe and Africa into the HudBay fold. "The reality is that if you want to run a mining company and create long-term value, you have to look at putting your balance sheet to work," Palmiere told the Financial Post this week. The newspaper reported that Lundin's assets were worth "billions" just a few months ago and that Palmiere believes now is a good time to buy cheap. In any event, the fate of the Lundin takeover may not be all that's at stake. Vic Alboini of Jaguar Financial, a HudBay shareholder and one of the strongest opponents of the takeover, told the Post he expects shareholders will "vote massively" to oust Palmiere and his board. Lundin shareholders have already voted overwhelmingly to endorse the takeover.
