CORRECTED-Proxy adviser backs miner Augusta's poison-pill takeover defense
(Corrects company name in sixth paragraph to Augusta from HudBay)
TORONTO, April 17 (Reuters) - Proxy adviser Glass Lewis has recommended that its clients vote to maintain Augusta Resource Corp's shareholder rights plan, which is meant to thwart a hostile takeover bid from larger Canadian base metals miner HudBay Minerals Inc.
Investors will vote on whether to cancel the plan at Augusta's May 2 shareholder meeting. Without the plan, HudBay's hostile bid, which expires May 5, would be more likely to succeed.
Shareholder rights plans, often called poison pills, are designed to make hostile takeovers difficult.
In its report, which was viewed by Reuters, Glass Lewis said it believes that rights plans are generally "not conducive to good corporate governance," but that it supports limited plans in some circumstances.
Poison pills can give directors more time to seek out friendly bidders, boosting payouts to investors.
Glass Lewis said Augusta's plan does not include any of several provisions that would normally raise governance concerns. For example, the plan does not stipulate that buyers must pay cash, as some plans do.
HudBay wants control of Augusta's Rosemont project in Arizona, seen as one of the most promising copper projects in the United States. Augusta said in March that nine parties had expressed some interest in the company.
HudBay has asked securities regulators to cease trade the poison pill, which would render it ineffective regardless of the outcome of the shareholder vote.
"Our intention is to put the power of this important decision in the hands of Augusta shareholders by giving them the opportunity to vote on the rights plan on May 2, three days before the expiry of HudBay's bid," Augusta Chief Executive Gil Clausen said in a release.
Proxy advisory firms such as Glass Lewis and Institutional Shareholder Services advise institutional investors ahead of shareholder votes. Their reports often influence votes for or against management. (Reporting by Allison Martell and Euan Rocha; editing by Peter Galloway)