Globe says HudBay to buy Lundin, shareholders not happy

2008-11-24 05:32 ET - In the News

Also In the News (C-JFC) Jaguar Financial Corp
Also In the News (C-LUN) Lundin Mining Corp

The Globe and Mail reports in its Saturday, Nov. 22, edition that HudBay Minerals has offered to pay Lundin Mining 0.3919 a share for each share of Lundin. The Globe's Richard Blackwell writes the proposed deal prompted Jaguar Financial, which trades for 7.5 cents, to make an offer to buy HudBay itself, sell off its assets and distribute the proceeds. The HudBay-Lundin deal is not set to close until February at the earliest, but in the meantime HudBay will inject $136-million of cash into Lundin, in the form of a loan that will eventually be converted into a 20-per-cent equity interest. That money was needed to deal with "liquidity issues and solvency issues" at Lundin. The combination of Lundin's growth assets and HudBay's producing mines and strong cash base will create a company that is "extremely powerful, and very, very flexible," said HudBay chief Allan Palmiere. HudBay stock gave back $2.07 Friday in Toronto to close at $3.16. Goodman & Co. investment manager David Taylor was highly critical of the acquisition. While the company will have $900-million in the bank after the deal is done, the dilution caused by issuing new stock will sharply trim cash per share, Mr. Taylor said.