Could someone please confirm or correct my understanding of the following.
My understanding of the AGM resolutions are that 1 2 and 3 are standard stuff and need a majority of 50.01 % to be passed (approx 298m shareholding).
Resolution 4 is to allow AMC to issue up to 200m additional shares to raise capital and again (being an ordinary resolution) requires a 50.01% majority to be passed.
Resolution 5 (being a special resolution) is to allow the Crede deal to continue but requires a 75.01% majority (approx 446m shareholding). Therefore shareholders wanting to block the Crede deal need a "no" vote to resolution 5 by approx 149m shareholding.
I am puzzled as looking at the recent Vast AGM results, they had a "no" vote to two resolutions by 76% rather than the required 25.01%.
Obviously there has been a lot of anti Crede talk on here over recent months but there does not appear to be the same concerted, organised "NO" campaign that was evident at Vast, which ultimately proved successful if kicking the Crede deal into touch.
For the record, I am holder (or proxy) to 1,543,584 shares and will be attending the AGM and voting "no" to Crede. Assuming my understanding of the above is correct, my vote is just over 1% towards defeating resolution 5 and kicking the Crede deal into touch.
As ever, the above is based upon my understanding. PDYOR
Crazy, We don't operate in a perfect world, many of the best businesses that I worked with as a banker had more than a few 'errors' on the scorecard and many of the so called perfect FDs were 'wiped out' in one hit from a bad commercial decision and yes many were very unlucky and business failure resulted, you have to form a judgement, which we disagree on. That's no problem as we are each free to cast our votes as we choose. RL.
I have worked with many good financial & commercial directors over the years where such awful clauses would never make it through the first review, if they had signed off on them, they wouldn’t have lasted long.
THE BOD BEHAVIOUR SURROUNDING & FOLLOWING THE AGREEMENT:
- The company broke its own rules by advising on the deal before it was signed, halting a climbing share price. - The company withheld the shareholder distribution which obscured what was occurring early in the deal. - There has been a continuous failure to issue thresholding crossing RNS’s. - The company has not issued any real share price enhancing news since the deal was entered into. - The company cancelled sizeable news due early in the year (audited operational blueprint). - The updating of the FAQ’s has been extremely poor - Sensible questions from holders of a sizeable combined shareholding have not been addressed. - We are being asked to vote blind at the AGM.
So whilst I am voting no to the re-election of Brian Savage, It’s not because I’m attributing the blame solely on him (although I suspect he is responsible for bringing Crede to the table). I think the combined board has let us down with this deal and their communication.
Next year Robin Young will be up for re-election and being such an integral part of the company removing him would be a mistake, I therefore feel that this is our opportunity to add a fresh perspective as it seems that our board is very heavily weighted with explorers. I’d therefore be looking for a replacement to have much more financial & commercial acumen in the pre-production, construction and operation of such a large mining operation.
Nobody has fallen on their sword here. It is purely the requirement that at the AGM a board member retires. At least if he had had the integrity not to put himself up for re-election it might have given a further indication to the shareholders that something has gone seriously wrong and the 200m must not be voted for.
I really don’t buy that the board were just unlucky. Luck is for gamblers and bad luck should not be used as an excuse for weak terms & conditions in a contractual agreement. If Crede had been the long term institutional investor that we were led to believe then we would not attribute it to good luck. It would be a great management team, skilful negotiation etc. etc.
You mention that you did your own due diligence, many of us did, but ultimately it was not our responsibility to carry it out, it was AMC’s Board of Directors. They have the relationship with Crede, the emails, the telephone conversations, the meetings, assurances, the full contractual document. So when we are told via RNS that they are a long term institutional investor, it carries a lot of weight for current and new investors.
There are a lot of smart people across the boards, bulls & bears, yet I don’t remember anybody recognising at the time that the warrants could be converted for free from our RNS. A major element missed. I don’t believe it is a coincidence that it was within a single badly punctuated sentence.
You are right, Vast got it wrong also. However, they were in a much more precarious financial situation at the time. Perhaps AMC signing with Crede gave Vast confidence to also.
In making my decision on whether to re-elect Brian Savage, I am not just considering the T&Cs of the Crede deal, but also how the board have acted towards the shareholders and the fact that the company has shifted from exploration to pre-production.
THE CREDE AGREEMENT:
How it feels discussions went:
BoD: You want a clause that allows you to sell all of your shares and then we replace them for free? Crede: Yes please, but you can trust us, we are a long term institutional investor. BoD: Well that’s ok then, we just need to obscure it a little from our shareholders when issuing the RNS, where do we sign. (Handshakes, backslaps & an early Christmas beer on expenses)
How discussions should have gone:
BoD: You want a clause that allows you to sell all of your shares and then we replace them for free? That isn’t acceptable to us and certainly wouldn’t be to our shareholders. That clause needs to be removed or tightened up to prevent it being actionable at least within the 12 month tranche period. Crede: Well, we are a long term institutional investor, but just to appease you lets say the share price must be less than we paid. BoD: Nice try, but unlikely to matter should you sell heavily. Thank you for your time but this is a key point that we will not compromise
"In no event shall the Investor be able to exchange the Warrants for new Ordinary Shares unless the volume weighted average price of Ordinary Shares has been below the Subscription Price associated with each issue of Warrants for 3 consecutive days prior to the date of giving notice of an exchange of the Warrants and the Investor must have no interest in Ordinary Shares at the time of giving notice. The Company has the right to call the Warrants at any time the Ordinary Share price is trading at a 25% premium to the exercise price of the Warrant for a period of 20 consecutive days and the average daily trading volume of Ordinary Shares during this period exceeds £450,000 in value."
The AMC call option is a bit more onerous than you suggest. Having said that on the right news....
Pure speculation, but I would have thought that Crede will focus on maximizing their take from Tranche 3 (and the residual Tranche 3 & 2 warrants) rather than trying to preserve Tranches 4 & 5.
Getting the warrants into the money looks to be quite difficult: my reading is that the SP has to be 25% over the warrant price, itself 130% of the strike price (3.9p from recollection for Tranche 3). share price. That looks like over 6p, itself not impossible, as this does spike. What might be trickier, is that it has to be for a period of 20 days and with a daily value in excess of £450,000, so they do not get caught on a quick spike.
Psyclops, I do not agree with your differentiation between resolution 4 and 5: both are subject to the "offer before expiry" clause, though slightly differently worded.
"save that the Company may before such expiry make an offer or agreement which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities pursuant to any such offer or agreement not withstanding such expiry."
The practicality of this makes little odds: whilst voting yes to resolution 4 would effectively permit a rights issue, the likelihood of the company going down that route (in which Crede would only be a small player) is low.
Thinking about the "by tranche" structure of the Crede agreement, it does look as if it does bar any equity apart from existing warrants until post 14th December, but they seem to be funded for this year , so perhaps it all just gets revisited in 2017.
"In the money" warrants would certainly fill a gap and it is possible that the euphoria of kicking Crede into touch might be the good news that does manage to trigger the warrants, as it did for Vast: that would equate to receiving Tranche 4 and with massively less dilution.
It is surprising that the SP has not reacted more positively to this news: perhaps the fear of losing probably a maximum of £5m funding (and possibly much less) is being overdone?
RlL Fully with you as i hope are many others. One point about Crede tactics. If we assume they want the resolutions passing and sense that the vote could be tight could they decide to convert all their warrants even if they have to pay for some of the shares they will acquire. In saying this I am assuming that the warrants do not carry with them any voting rights
My votes were in at 9am yesterday (not that it makes any difference).
I understand the argument about chiefs falling on their sword, regardless of the fact the BoD may just have been unlucky with Crede rather than incompetent. Vast have an army of Accountants and former investment bankers on their payroll, yet they also got it wrong. Amur took the step of employing an advisor to the deal which was sensible, had they not done this maybe the charge of incompetence has more credence. I too did plenty of DD into Crede's back catalogue, rather than just rely on the website and found nothing to suggest they would act has they have done and I have seen no evidence presented by anybody to suggest that warning signs were missed. So Amur have been very unlucky IMO and as such I am prepared to give Brian Savage another tour.
Turning to resolutions 4 & 5 I hear the argument about the risk of voting them down, but don't agree. The priority for me is to make sure Crede are history and if another deal is not already lined up then IMO Amur has sufficient cash to continue de-risking the project (infill & step drilling to the west of MKFL, reserve statement & metallurgy) until such time as a better deal is available. That's a risk I am prepared to take.
At the last presentation RY made it very clear that multiple funding sources are now showing themselves and since that date the project has improved further with the fantastic drilling results at the eastern edge of MKFL. RY also said they would be taking a hard look at all their funding options and so I would be very surprised if an alternative funding deal is not already agreed.
If we vote down both resolutions then Crede can be terminated and likely without any material penalties or continuing obligations (that's what Vast advised after they voted against Crede). If we vote for further shares then there could be significant penalties for early termination.
Also I am not sure where we would stand if we voted against resolution 5 and for resolution 4 so that existing shareholders have to offered the shares first. What would be the position if existing shareholders could not pony up all the £5m, presumably the balance would have to be offered to Crede. In the case of Vast the take up to an open offer was only c50% and that's with a warrant attached. Vast shareholders voted against both resolutions and were able to terminate Crede, so that's how I have voted so as to not take any chances and leave any doors open to Crede, who clearly cannot be trusted. I will take the convertible loan note from a new provider that has been flagged by Psyclops.
This will then force RY to return to shareholders and make the case as to why I should vote for further issuance for any new funding deal. That's not an unreasonable request given what has gone before and if the cash really is critical to the DFS then RY will need to say so, whereas in this case he has been totally silent.
Just to anyone with Halifax that wishes to vote, I contacted to advise I hadn't received a corporate action from them.
They stated that AAMC had not advised them of the meeting. I gave the person I spoke to details of how I wised to vote, which is yes for the first two and no for the last three, and they are to contact AMC and register this with them directly.
I would advise all who hold an account with Halifax to do the same.
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