TORONTO — — HudBay Minerals Inc. chief executive officer Allen Palmiere says a slate of directors nominated by a major shareholder to replace the company's current board is inexperienced and lacks a long-term strategy for the company.

SRM Global Master Fund LP, a Monaco-based hedge fund that owns about 11 per cent of HudBay, requisitioned a special meeting on March 25 for shareholders to vote on the proposed board after a merger deal with Lundin Mining Corp. collapsed this week.

On Friday, HudBay said its lenders have refused to renew an $80-million credit facility that expires Saturday, due to SRM's attempt to remove the company's board of directors.

Mr. Palmiere said no funds are currently drawn on the facility, but the lenders said they're not comfortable with the current amount of uncertainty facing the company.

"The bankers came back to us and said that, given the uncertainty in the lead-up to the vote on the 25th of March and given their perception that they would not feel comfortable with any strategy adopted by SRM, they chose not to renew the facility," Mr. Palmiere said in an interview with The Canadian Press.

"They did tell us, however, that once we get through this process, they're happy to sit down with existing management and discuss a new facility."

He said SRM has "repeatedly campaigned" for a significant stock buyback which, combined with the hedge fund's lack of strategy for HudBay's future, is making the bankers nervous.

"That obviously would affect the balance sheet of the company and potentially the credit-worthiness, so they are unwilling to lock into a facility today until that uncertainty is gone," Mr. Palmiere said.

Analysts have predicted the majority of shareholders will vote in favour of removing HudBay's board — and its management — after the Lundin deal provoked an outcry from the company's owners.

HudBay shareholders were originally told they couldn't vote on the deal, but the Ontario Securities Commission ruled that a vote must be held, as the transaction — which would have more than doubled the number of outstanding HudBay shares — would undermine "the quality of the marketplace" if it went ahead without approval.

Lundin shareholders overwhelmingly approved the merger a few days after the OSC's ruling, but it seemed likely that HudBay shareholders would vote it down and the deal was scrapped on Monday.

Opposition to the merger was spearheaded by Jaguar Financial Inc., a relatively small merchant bank, but SRM, the Ontario Teachers' Pension Plan and Corriente Master Fund had also called for HudBay to hold a shareholder vote.

Mr. Palmiere said he believes the likelihood of HudBay shareholders approving SRM's slate of directors is "highly unlikely."

"Mining companies, by definition, are long-term value-creation plays. Hedge funds do not have that kind of time horizon and are looking for short-term gains," he said.

"In addition to that, you have a slate of directors that have been put up by SRM that have surprisingly little experience as directors of public companies, they've got surprisingly little experience in governance and providing direction to public companies, and they don't have a lot of mining experience."

Mr. Palmiere added that HudBay offered SRM the chance to have two seats on the current board, but they declined.

"The biggest issue is, you have one shareholder who owns 11 per cent of the company attempting to take total control of the company by their nominee slate. That's just not acceptable," he said.

Mr. Palmiere said he still believes the Lundin transaction was in the best interests of both companies, but HudBay has the benefit of a strong balance sheet going forward — with approximately $700-million in cash — and will continue to look at potential acquisition opportunities.

"We will look at opportunistic acquisitions. There are distressed assets out there for sale today," he said.

HudBay, long thought to be a takeover target, is a Toronto-based integrated mining company with its main operations in northern Manitoba and Saskatchewan, plus other operations in Central America.