Sirius Update #4  5 Feb 2020

Over 700 Sirius shareholders have now joined the ShareSoc Sirius Shareholder Group (SSSG) and more are joining at a rapid rate. Please join ShareSoc and SSSG. The more members of SSSG we have, the more influential we will be.

We have successfully lobbied Sirius and they agreed to meet. We have sent them a 5 page letter and they sent a detailed response. The Sirius meeting was with CEO Chris Fraser, Chairman Russell Schrimshaw and others, and happened on 4 Feb. A note is below of the key points.

We have now agreed a meeting  with Anglo and SSSG representatives, probably next Monday at 11.30am.

The MPs letter writing campaign demanding action has started to have an effect. If you have not written yet, please do so now. Please include your personal details as this will help to force your MP to listen and feel free to add your personal concerns: then email your MP. Google “find my MPs email” to get his/her address or use this link https://www.parliament.uk/get-involved/contact-your-mp/

The Press coverage is working and may be starting to have an effect. We have established good links with several journalists.

Jupiter have refused to meet with us, or even to talk on the phone. This may be because they are pursuing options they don’t want to or cannot (due to legal reasons) discuss with us.

Mark Northway, ShareSoc Chairman, wrote this summary of the meeting with Sirius:

The ShareSoc Sirius Shareholder Group (Mark Northway, Mark Jones, Ian Martignetti, Yashmin Ismail, Chris Spencer-Phillips, Paul de Gruchy) met with Chris Fraser (CEO), Russell Scrimshaw (Chairman) and Nick King (General Counsel and Company Secretary) of Sirius Minerals yesterday.

The meeting was subject to takeover panel rules and was chaperoned for that reason by JPMorgan and Lazard.

Chris Fraser ran through a chronology of the events leading to the AAL bid and the current stark choices for shareholders.

The chronology is covered by the company’s 2.7 announcement of 20th January (https://siriusminerals.com/site/assets/files/6349/co-_38098697-v1-r…) amplified by the company’s 1st February reply to ShareSoc’s letter (https://siriusminerals.com/site/assets/files/6378/response_to_share…). All shareholders should read these documents thoroughly.

Key points in the discussion were:

• Sirius has undergone effectively two global searches for a strategic partner for the project. At this point, the only actionable proposal from those searches has been the bid from Anglo American.
• The cash burn rate, which has been managed down as far as possible, effectively leaves the directors with no choice other than to recommend the Anglo American bid.
• Anglo American has stipulated that it will only bid on the basis of a cash offer leading to full control.
• The board has not closed down discussions on alternative solutions, including the £519mm Alternative Debt Proposal, and will continue to review any and all viable alternatives to the Anglo bid until the eleventh hour as they are required to do; but they were at pains to stress that there is absolutely no reason for optimism.
• The possibility of a fundraise from existing shareholders was discussed, and the board explained their reasons for discounting this, providing some visibility on the retail appetite for previous share issues.

Specific mention was made of the actions of JPMorgan in vetoing the issue of warrants to support the 2019 financing. Chris Fraser is of the view that this refusal effectively collapsed the financing, preventing access to the key Revolving Credit Facility. The actions of JPMorgan and motivation should perhaps be reviewed once the dust has settled.

Both Chris Fraser and Russell Scimshaw are heavily invested in Sirius (Y/E 2018 some 124mm and 44mm shares respectively), and so are strongly incentivised to achieve the best outcome for shareholders.

A large part of ShareSoc’s role as facilitator in this process is to help shareholders to come to terms with this difficult situation.
This was a frank exchange which allowed the SSSG team to gain a deeper understanding of historical events and underlined the binary nature of the choices now facing shareholders.

If you are a Full Member of ShareSoc you can see the comments on this in the Sirius Forum on the ShareSoc Members’ Network, including Yashmin Ismail’s commentary.

All Sirius shareholders are encouraged to join the SSSG by going here – https://www.sharesoc.org/campaigns/sirius/

and to join ShareSoc as a full member https://www.sharesoc.org/membership/full-membership/, which offers full members exclusive access to our SSSG forum and to other valuable proprietary content, as well as helping to fund our work.

Cliff Weight, ShareSoc Director and SSSG team member.

 

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