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Sirius Board Rules Out Alternative Rescue Package

Sirius Board Rules Out Alternative Rescue Package

Published by Matthew Pells at 1:17pm 14th February 2020. (Updated at 2:00pm 14th February 2020)

The Board of Scarborough Based Sirius Minerals has today issued an update on an 'alternative' proposal to save the cash strapped Whitby mining operation, saying that the proposal would not work.

In January the Sirius Board reached an agreement with Anglo American on terms to sell the company at 5.5p per share. That offer will be voted on by Sirius shareholders in March.

RELATED STORIES : Sirius Takeover Could Complete in March

Today the board have confirmed that there have been discussions on potential debt financing proposal from a consortium of financial investors, which could have removed the need for the company to be sold.

The 'Alternative Proposal would have..

"raised a US$680 million funding package to cover the initial scope of work. This would have been a precursor to needing to raise a further US$2.5 billion of capital to reach an installed and ramped up production capacity of 10 mtpa."

The Sirius Board say that in order for the alternative proposal to be viable four things would need to have happened.

    • (i) Sirius to undertake a substantial new equity raising,
    • (ii) concessions from some of Sirius' major creditors,
    • (iii) certain local authority approvals,
    • (iv) further due diligence.

The Board have today confirmed that the Company has not been able to secure an institutional anchor investor willing to provide sufficient support for the Alternative Proposal which was part of the consortium's requirements. 

They say that...

"Without an institutional anchor investor providing the majority of the equity required, the consortium of financial investors have informed the Board that they do not consider the Alternative Proposal to be viable and have therefore ceased discussions with the Company."

The Board hare reiterated their position that shareholders should vote in favour of the Anglo American takeover saying..

"if the Acquisition is not approved by shareholders and does not complete there is a high probability that the Sirius Board will place the business into administration or liquidation."

Here is the Boards update in full...

Update on the alternative proposal 

On 20 January 2020, the Boards of Sirius Minerals Plc (Sirius), Anglo American plc (Anglo American) and Anglo American Projects UK Limited (Bidco) announced that they had reached agreement on the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Sirius by Bidco (the Acquisition), to be effected by means of a scheme of arrangement under Part 26 of the Companies Act 2006 (the Scheme).

Further to the publication of the circular in relation to the Scheme (the Scheme Document) by Sirius Minerals Plc (Sirius) on Friday 7 February 2020, the Sirius Board (the Board), in conjunction with its financial advisers, has continued to explore the potential debt financing proposal from a consortium of financial investors (the Alternative Proposal) to raise a US$680 million funding package to cover the initial scope of work. This would have been a precursor to needing to raise a further US$2.5 billion of capital to reach an installed and ramped up production capacity of 10 mtpa.

As described in the Scheme Document the terms and conditions required to satisfy the Alternative Proposal were the following: (i) Sirius to undertake a substantial new equity raising, (ii) concessions from some of Sirius' major creditors, (iii) certain local authority approvals, and (iv) further due diligence. The Board confirms that the Company has not been able to secure an institutional anchor investor willing to provide sufficient support for the Alternative Proposal which was part of the consortium's requirements. Without an institutional anchor investor providing the majority of the equity required, the consortium of financial investors have informed the Board that they do not consider the Alternative Proposal to be viable and have therefore ceased discussions with the Company.

As stated previously, if the Acquisition is not approved by shareholders and does not complete there is a high probability that the Sirius Board will place the business into administration or liquidation. Therefore, the Sirius Board unanimously recommend that Sirius Shareholders vote in favour of the Scheme at the Court Meeting, and that the Sirius Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as all of the Sirius Directors have irrevocably undertaken to do in respect of their own legal and/or beneficial holdings of Sirius Shares.

 

Comments

There are 2 comments on this page.

zara, on 14th February 2020 3:18pm
or maybe the alternative proposal is not as beneficial to the board!!
The Orical, on 15th February 2020 1:42am
At a time of uncertainty in the world businesses must secure the best route. Yes, investors would have lost out but the project will continue and provide local employment for generations to come. The alternative is a hold in the ground and a redundant workforce in a area that needs jobs.

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