Last ditch plea from shareholder group to Sirius Minerals before key vote on takeover takes place

A shareholder action group has issued an open letter to Sirius Minerals ahead of the vote on the Anglo American takeover tomorrow, urging against the deal.

Monday, 2nd March 2020, 12:18 pm

In January, mining giant Anglo American made an offer for Sirius Minerals, the terms of which would see existing Sirius shareholders receive 5.5p for each of their shares.

A crunch vote on Tuesday will decide whether the proposal is accepted.

Sirius Minerals has its headquarters in Scarborough and the Woodsmith mine is being constructed at Sneaton near Whitby.

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As many people purchased their shares at considerably higher prices than the proposed 5.5p, the offer could see them lose large amounts of money.

Sirius has warned shareholders that the only alternative to the Anglo American deal is administration, which would see them lose everything.

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The outcome of tomorrow's vote remains uncertain due to the high number of small retail investors, many of whom live in the region, who could vote against the deal

In 2018 nearly 85,000 individuals held half of the company's shares.

Sirius Minerals' Shareholder Action Group has issued an open letter to Sirius' Board and institutional investors stating Anglo's offer "significantly undermines the intrinsic and actual value of the asset, the business and the share price."

After highlighting that the area surrounding Woodsmith mine contains the highest-grade resource of polyhalite in the world and claiming the offer does not represent fair value, the letter continues: "The loyalty shown to the project by retail investors from its embryonic state, over a period in excess of ten years, should be repaid with an opportunity to explore the funding of the next stage."

The group is urging the board of directors of Sirius Minerals to instead commit to a thorough exploration of other ways to raise cash, provide clarification of the precise current cash reserves and delay the Scheme of Arrangement timetable.

The letter continues: "We would remind the board that we represent up to 85,000 shareholders and 50 per cent of the company shares.

"The board of Sirius has, through its CEO, repeatedly stated that it has - at its heart, the protection of shareholder interests and the unlocking of the mid to long term value of the project.

"The Anglo offer does not achieve that. It destroys the private investor."

After soaring into the FTSE 250, Sirius Minerals began to experience issues in 2018 as costs of the project grew and the firm had to find new supporters, despite a $250m investment from Australia's richest woman, Gina Rinehart.

In 2019, American bank JP Morgan agreed to provide a $2.5billion credit facility on the condition that Sirius raised a further $500m through a bond.

The bond was suspended in September 2019 and new plans to raise $600m also failed.

In February, institutional investor Odey Asset Management bought a 1.5% stake and also came out against the proposed takeover, calling for a 7p per share offer.

Sirius Minerals planned to produce up to 10 million tonnes of fertiliser a year through mining polyhalite and transporting it to Teesside through an underground tunnel.

The entire open letter from Sirius Minerals' Shareholder Action Group can be read here.