Sirius Minerals stand-off with investors over £405m sale: Bosses hold crunch talks with small shareholders
- Sirius Minerals is seeking the backing for a takeover by Anglo American
- But it needs support from 75% of investors to proceed
- Small shareholders who control as much as half of its stock are unhappy about it
Sirius Minerals bosses have held crunch talks with small shareholders as they desperately seek backing for a controversial £405million takeover of the company.
The troubled mining firm, which is trying to build a huge potash mine in the North York Moors, says it risks going bust unless the cash bid by Anglo American is rushed through.
But it needs support from 75 per cent of investors to proceed – and small shareholders who control as much as half of its stock are unhappy about the terms.
Controversy: The troubled mining firm says it risks going bust unless the cash bid by Anglo American is rushed through
Under the 5.5p per share bid by Anglo American, recommended by Sirius’s board, many investors are expected to make big losses on their original investment and will lose their stake in the project.
Sirius’s share price traded at a higher price for years and hit a high of 45p in August 2016. Shares were down 0.5 per cent at 5.5p in morning trading on Monday.
Jupiter Asset Management, Sirius’s second-biggest shareholder, has also urged the company to examine alternative rescue options.
It has set the stage for a showdown with the company, which says it will run out of cash by April unless Anglo’s takeover offer is approved.
Sirius chief executive Chris Fraser and chairman Russell Scrimshaw met with ShareSoc, which is representing hundreds of individual investors, in a bid to drum up support for the deal last week.
The meeting came after some individual shareholders voiced hopes that blocking the deal could lead to alternatives being considered, such as a £519million loan offer or giving Sirius investors Anglo stock.
But according to ShareSoc, Fraser and Russell dashed these hopes during the ‘frank’ talks. ShareSoc said: ‘The board has not closed down discussions on alternative solutions and will continue to review all viable alternatives to the Anglo bid until the 11th hour. But they were at pains to stress that there is absolutely no reason for optimism.’
ShareSoc was also told the amount of cash the company is burning through – which it has tried to minimise as much as possible – leaves the directors with no choice but to recommend the Anglo bid.
Anglo American made its approach last month after Sirius failed on its own to raise £400million that would have unlocked the extra cash it needed to finish the mine. The firm then revealed it needed a total of £465million to complete the next stage of the project.
But gaining the support of the company’s estimated 85,000 small shareholders when the Anglo deal is put to a vote on March 3 is key to getting it over the line, because individuals are thought to hold as much as 50 per cent of its stock.