CEO exits as OntZinc prices offering

The equity offering to finance OntZinc‘s (OTZ-V) purchase of Hudson Bay Mining & Smelting will raise up to $143.8 million, following agreements with a syndicate of seven investment houses.

And this will happen without Chief Executive Gregory Peebles, who has resigned, evidently at the request of the board. The company announced it was paying a severance of $500,000 “in connection with his resignation.”

OntZinc plans to buy Hudson Bay from Anglo American (AAUK-Q) for $325 million in a deal scheduled to close near the end of the year. The deal is conditional on OntZinc finding the financing for the purchase.

The issue is in the form of subscription receipts priced at 7.5 each. A receipt would convert automatically to one share and half of a purchase warrant once the deal with Anglo is closed. Warrants are exercisable for five years at 10.5.

The price and proceeds work out to the issue of about 1.9 billion warrants, including over-allotment subscriptions taken up by the underwriting houses. The company has about 243 million shares issued, of which 211 million are free-trading at the moment.

The gross proceeds represent about 44% of the purchase price of Hudson Bay.

A shareholders’ meeting in early December approved consolidation of the company’s shares at a ratio of up to 40-to-1. OntZinc subsequently announced it would consolidate at 30-to-1.

The meeting approved a name change to Hudbay Minerals, and a shareholder rights plan attaching rights to the almost 238 million shares that were outstanding at Nov. 9.