COEUR D’ALENE, Idaho--(BUSINESS WIRE)--
Hecla Mining Company (NYSE:HL)
today announced that it will make a takeover bid for all of the
outstanding shares of Dolly Varden Silver Corporation not owned by Hecla
and its affiliates for C$0.69 cash per share. The bid will be subject to
a minimum tender condition that more than 50% of the shares are
tendered, excluding shares owned by Hecla and its affiliates.
This offer reflects a premium of approximately 55% based on Dolly
Varden’s closing price on June 24, 2016, and a premium of approximately
97% based on the volume-weighted average price of the Dolly Varden
shares on the TSX-V for the 20 trading days ending June 24, 2016.
“While we believe that Dolly Varden can one day be a significant silver
producer, we are very concerned with the current Board’s value
destruction for shareholders,” said Phillips S. Baker, Jr., Hecla’s
President and Chief Executive Officer.
“These directors are not acting in shareholders’ best interests with a
new loan arrangement that causes substantial dilution at a low share
price. Their plan starts with issuing warrants with an 'option value' of
C$0.275 each and an exercise price of C$0.30, which is well below the
current share price and our offer price. The warrants are issued in
exchange for a loan whose maturity is only three months longer than the
existing loan and adds little to the treasury. The Dolly Varden Board is
proceeding with this arrangement despite Hecla’s expressed willingness
months ago to extend the existing loan and a formal offer that, compared
to the proposed new loan, extends the maturity a year longer, provides a
lower interest rate and two times more new funding. To protect ourselves
and other shareholders, we are offering to buy Dolly Varden shares for
cash at C$0.69. If we acquire all shares we expect to spend about $12
million.”
Hecla also announced that it has entered into support agreements with
shareholders (the “Supporting Shareholders”) who collectively hold
2,500,000 Dolly Varden shares and 1,250,000 Dolly Varden warrants.
Hecla and the shareholders who support the bid hold in aggregate
5,120,291 shares and 2,500,000 warrants, being approximately 34.4% of
Dolly Varden’s shares on a fully diluted basis. Each warrant entitles
the holder to acquire one additional share at a price of $0.30 per share
and is exercisable for a period ending September 30, 2018. The
Supporting Shareholders have agreed to tender their shares and warrants
into Hecla’s takeover bid, and to otherwise support the takeover bid.
Hecla, through its wholly owned subsidiary Hecla Canada Ltd., controls
2,620,291 shares and 1,250,000 warrants. Assuming exercise only of the
warrants held by Hecla Canada, Hecla owns and controls 3,870,291 Dolly
Varden shares, or approximately 19.8% of the shares calculated on a
partially diluted basis.
Hecla has notified the TSX-V of its concerns and requested that the
Exchange not approve the issuance of warrants to Dolly Varden’s proposed
new lenders. Shareholders who share Hecla’s concerns with this financing
package should contact the Exchange.
It is within the power of the Board of Directors of Dolly Varden to
significantly shorten the minimum bid period, allowing shareholders to
receive the benefits of Hecla’s offer in only 35 days. Shareholders are
encouraged to contact Dolly Varden and to urge management and the Board
to allow Hecla’s takeover bid to proceed in the minimum time frame
allowed.
Hecla’s takeover bid for Dolly Varden has been approved by Hecla’s Board
of Directors and will not require approval by its shareholders. Hecla’s
takeover bid will be subject to a condition that there be validly
deposited and not withdrawn such number of Dolly Varden shares which,
excluding securities beneficially owned or over which control or
direction is exercised by Hecla or its affiliates or any person acting
jointly or in concert with Hecla, constitutes more than 50% of Dolly
Varden’s outstanding shares. The bid will also be subject to certain
other customary conditions.
Important Notice
This press release does not constitute an offer to buy or the
solicitation of an offer to sell any securities of Dolly Varden.
About Hecla
Founded in 1891,Hecla Mining Company (NYSE:HL)
is a leading low-cost U.S. silver producer with operating mines in
Alaska, Idaho and Mexico, and is a growing gold producer with an
operating mine in Quebec, Canada. The Company also has exploration and
pre-development properties in six world-class silver and gold mining
districts in the U.S., Canada, and Mexico, and an exploration office and
investments in early-stage silver exploration projects in Canada.
Cautionary Note Regarding Forward-Looking Statements
Statements made or information provided in this news release that are
not historical facts, such as anticipated production, sales of assets,
exploration results and plans, costs, and prices or sales performance
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and "forward-looking
information" within the meaning of Canadian securities laws. Words such
as “may,” “will,” “should,” “expects,” “intends,” “projects,”
“believes,” “estimates,” “targets,” “anticipates” and similar
expressions are used to identify these forward-looking statements.
Forward-looking statements involve a number of risks and uncertainties
that could cause actual results to differ materially from those
projected, anticipated, expected or implied. These risks and
uncertainties include, but are not limited to, metals price volatility,
volatility of metals production and costs, litigation, regulatory and
environmental risks, operating risks, project development risks,
political risks, labor issues, ability to raise financing and
exploration risks and results. Refer to the company's Form 10-K and 10-Q
reports for a more detailed discussion of factors that may impact
expected future results. The company undertakes no obligation and has no
intention of updating forward-looking statements other than as may be
required by law.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160627006234/en/
Hecla Mining Company
Mike Westerlund, 800-HECLA91 (800-432-5291)
Vice
President - Investor Relations
hmc-info@hecla-mining.com
Source: Hecla Mining Company