Hudbay Minerals Inc said on Tuesday private equity firm Waterton Global Resource Management has filed a lawsuit against the mining company in a bid to stop it from soliciting proxies for its annual shareholder meeting in May.
The lawsuit escalates the tensions between the Toronto-based miner and Waterton, which has blamed Hudbay’s management for “abysmal” shareholder returns and “chronic underperformance,” and has proposed five new independent board members, two of whom Hudbay has accepted.
Waterton, which says it owns 12 per cent of Hudbay, alleges management’s circular for Hudbay’s May 7 annual shareholder meeting contains misrepresentations, Hudbay said in a statement.
Waterton did not immediately respond to a request for comment.
“Hudbay believes the litigation is frivolous and will vigorously defend itself,” the miner said, adding it will seek to recover its legal costs from Waterton.
Hudbay shares were up 1.4 per cent at $9.92 on the Toronto Stock Exchange on Tuesday morning, erasing some of the 4.1-per-cent loss from Monday. The benchmark S&P/TSX Global Gold Index was down 1.5 per cent on Tuesday.
In a letter to investors on Monday, Waterton said Hudbay’s acceptance of two of its proposed board members to an expanded 11-member board “does not constitute the level of change that is desperately needed,” and urged shareholders to vote for its five board nominees.
Waterton has also opposed Hudbay’s alleged plans to buy Chile’s Mantos Copper for about $780-million. Bloomberg reported the companies were in talks in October.