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Agreement Reached For Takeover Of Whitby Potash Mine

Agreement Reached For Takeover Of Whitby Potash Mine

Published by Karen Liu at 7:44am 20th January 2020. (Updated at 5:28pm 20th January 2020)

The owners of the potash mine near Whitby has announced it's reached an agreement on the terms of a recommended cash acquisition. 

Earlier this month, there were talks between Sirius Minerals and Anglo American about a possible takeover.

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In an announcement today, Sirius Minerals say Anglo American Projects UK Limited, which is a wholly owned subsidiary of Anglo American, will acquire the entire issued and to be issued share capital of Sirius.

Under the terms of the purchase, Sirius shareholders shall be entitled to receive 5.50p for each Sirius share, which values the company at around £404.9 million.

Sirius Minerals say if the acquisition is not approved by shareholders and it does not complete, then there is a high chance the business could "be placed into administration or liquidation within weeks thereafter".

The company said:

"This outcome would most likely result in Shareholders losing all of their investment, as well as put the future of the entire Project, and its associated benefits for the local area and the UK, at risk."

Commenting on the Acquisition, Mark Cutifani, Chief Executive of Anglo American, said:

"Anglo American's recommended offer provides greater certainty for Sirius' Shareholders, employees and wider stakeholders, while bringing the prospects for the development of this potential Tier 1 Project closer to reality.

We intend to bring Anglo American's financial, technical and product marketing resources and capabilities to the development of the Project, which of course would be expected to unlock a significant and sustained associated employment and economic stimulus for the local area.

The addition of the Project supports our ongoing transition towards supplying those essential metals and minerals that will meet the world's evolving needs - in terms of the undoubted need for cleaner energy and transport, and providing infrastructure and food for the world's fast-growing and urbanising population.

Our development of the Project in the years ahead reinforces the quality of our portfolio and our long-term growth profile, further enhancing our ability to deliver leading returns on a sustainable basis and enduring value for all stakeholders."

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Commenting on the Acquisition, Russell Scrimshaw, Chairman of Sirius, said:

"Four months ago, following the setbacks in the bond market, we took the difficult decision to slow the pace of development of our project and initiate a strategic review to reassess how best to unlock the long term value for our Shareholders, the community, the UK, and our customers all around the world.

The scope of the strategic review was to consider and incorporate optimisations to the Project development plan and to explore alternative funding solutions, including looking for a strategic partner to acquire a minority interest in the Project to provide those funds and support the senior debt financing required to complete the Project.

We were successful in reducing the initial funding needs of our Project to map out a way to develop the Project in a way that better aligned risk to capital providers but, despite an extensive global search for a strategic investor, we have to date not received a firm proposal for a partial Project stake. The only viable proposal was received from Anglo American in early January, who were only interested in pursuing a 100% control transaction.

Alternative financing solutions have also been pursued in parallel to the strategic partner process, which resulted initially in a non-binding proposal being received in December 2019 and subsequently a revised proposal being received on 9 January 2020.

However, in the opinion of the Sirius Board and its advisers, the terms of the proposal received and the conditions attached are not acceptable in their current form. It is highly unlikely that acceptable revisions to this financing proposal can be delivered and implemented by the end of March 2020.

We acknowledge that to many Shareholders our decision as a board to recommend this offer will have come as a shock. Your board deeply regrets that we could not deliver the complete stage two financing in 2019 despite a very broad and thorough process. Going into the strategic review the Sirius Board's strong preference was a solution that allowed current Shareholders to participate as fully as possible in the future development of the Project. Following the strategic review process it is clear that no such options are currently available to us and in that context Anglo American's offer is the only feasible option.

We also recognise the returns that this offer would represent are not what either our shareholders or the Sirius Board had previously hoped for. We regret that we are not able to deliver on our long-term goal of Sirius being able to deliver the Project into production, although we assure all stakeholders that the team has worked tirelessly and diligently over the last nine years to try and achieve that. However, given the current cash constraints of Sirius, and lack of realistic and deliverable alternative financing and development options, we believe this to be a fair approach from Anglo American, a company committed to approaching the Project in the right way, and with the resources to complete the job.

We now face a stark choice. If the Acquisition is not approved by Shareholders and does not complete there is a high probability that the business could be placed into administration or liquidation within weeks thereafter. This outcome would most likely result in Shareholders losing all of their investment, as well as put the future of the entire Project, and its associated benefits for the local area and the UK, at risk.

This is the context in which your board must assess the offer for your company and, having given due consideration, your board believes the Acquisition to be in the best interests of Sirius and all of its stakeholders, providing Shareholders with some financial return."

For more visit: https://siriusminerals.com/investors/announcements/

Comments

There is 1 comment on this page.

zara, on 20th January 2020 4:37pm
bet the bosses will still come out of it smiling! they talked the locals into getting shares and now saying if you do not accept the loss to yourselves you will lose everything anyway. Glad i was not fool enough to put money into this project, it was on dodgy ground from the beginning.

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