Sirius Minerals' (SXX) shareholders will vote on the Anglo American (AAL) takeover deal on 3 March.
The Yorkshire mining hopeful has told investors the all-cash, 5.5p a share offer is the only chance of the Woodsmith polyhalite project going ahead. This week, major shareholder Jupiter Asset Management said the company should have looked for options that kept it listed.
In the scheme document, the Sirius board said it had looked into both raising the $600m (£464m) needed to keep the development running for two years through either debt or equity, but this would have been too difficult to arrange before the company ran out of cash.
“Unless Sirius is able to secure additional funding or a merger or acquisition transaction involving Sirius by the end of March 2020 or soon thereafter, the Sirius board would be required to place Sirius into administration or liquidation,” the company said. An offer of a $680m loan was not worth pursuing, the company said, because cash would have run out by the time the conditions of the loan were met.
When the takeover was announced, Sirius chairman Russell Scrimshaw said it was a tough recommendation to make. “We acknowledge that to many shareholders our decision as a board to recommend this offer will have come as a shock,” he said. JPMorgan Cazenove and Lazard have recommended that the board back the deal.
Sirius said Anglo had first been identified as a backer in 2018, but had declined to come in as a strategic investor. In between these early talks and the takeover move, Sirius tried and failed to raise the 'phase 2' project financing for Woodsmith through a bond issue, equity raise, and loan from JPMorgan. The plan failed at the bond stage, which was needed for the $2.5bn loan to be issued.
Three-quarters of Sirius shareholders have to back the takeover for it to happen.
Under the Anglo plan, Sirius management and employees would stay on for a year after the deal closing, with the senior management keeping their existing bonus and long-term incentive scheme.
