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kenj - thanks for helping put everyone in the picture and accepting I was not wholly wrong.
Perhaps. I can now explain why I'm labouring this, it's not because I'm hopeful or wearing rosy coloured specs, I agree with you and I think it is almost certain the £3 deal will go through.
However, the key word is "almost sure", I've been in takeover many times in various sectors and unless someone kicks off against it, it simply either fails or sails through if they've got the money - the interesting bit is when a rival bid or someone with a blocking share steps in. Hence my suggestion rushing for the exit door may be a little premature when an offer isn't even on the table and no opinion/advice from a trustworthy source. For me there's no rush
Sorry Jointhedots, much of what you said was right.
Small shareholders cannot be forced to sell, but they would have no further say in how the company is run; Fortiana would have complete control. The shares may well be in limbo and become difficult to trade. And who wants to hold shares with a BoD that is trying to eject it's shareholders and de-list?
Apologies, there were a couple of errors in my last post!
The use of the word MANDATORY refers to Fortiana having to make an offer, not HGM shareholders having to accept it. Indeed it looks like shareholders do not have to accept the 300p offer.
"Fortiana will acquire interests over 40 per cent. of the Highland Gold Shares pursuant to the Acquisition, requiring only a relatively small number of Independent Highland Gold Shareholders to accept the Offer to satisfy the Condition. Fortiana would then have control over the Highland Gold Group and the trading in Highland Gold Shares may become increasingly illiquid. If Fortiana acquires interests in excess of 75 per cent. of the share capital of Highland Gold, Fortiana may seek to terminate the admission of the Highland Gold Shares to trading on AIM, thereby further reducing liquidity."
When STEL was swallowed up by NWF shareholders did not get a vote and many including myself felt robbed. Thankfully we received stock in NWF and I was able to later sell at a premium to the takeover price. This is different of course, I view this as a hostile undertaking with dodgy board backing that makes absolutely no sense with the gold price a couple dollars of $2k/oz.
I think it's highly likely the deal will succeed at this point.
You are right JTD, I do not know everything!
So when I read the RNS saying the directors were selling out to Fortiana, who would then add to their 40% of shares, until they achieved 50%, and then make a mandatory offer of 300p for all the company's shares; I initially did not believe it.
So I did some research, and found that shareholders owning over 50% of a company's stock can indeed do this.
They do not need to put this to a vote, they will by then have over 50%, and they do not need to go to the courts to obtain a scheme of arrangement. The take over code is quite clear, it is likely to be waived through.
Also note the use of the word MANDATORY- Yes that's right, you are not being asked to sell your shares to Fortiana, there is no 75% or 90% approval needed, your shares will be sold as soon as they have their 50%.
Yes they have not made a formal offer yet. That is because with only 40% of the shares, they would have to call an EGM and put it to the vote. They have made it quite clear that over the next few months they will accumulate shares and then strike when they have 50%.
Take off your rose tinted glasses and do what your name says.
Connect the dots and join the dots mean to put various facts and ideas together in order to see the whole picture or to understand something globally.
kenj - no need to get annoyed, there are some very aggressive and rude posters on this BB- you don't know everything, just posting a paragraph from the panel doesn't make it a complete assessment , when the code stretches to 425 pages and still is subject to fair interpretation via the panel.
Yes with 50% they get to takeover if they've not broken rules, but my understanding is that does not entitle them to force minority shareholders to sell, for that they need to get acceptances from 90% of shareholders or take over by a scheme of arrangement requiring a vote in favour of over 75% and court approval. I believe that all changes if a second party declares an interest or the panel decide something is not fair and reasonable.
I'm not saying it won't complete or 50% won't be enough, but it's not over until you have the money in your account
Summary from a Law Firm's website:
"Public takeovers in the UK are implemented by either a contractual takeover offer or a scheme of arrangement.
Under a contractual takeover offer, the bidder makes a general offer to all target shareholders. Shareholders are sent an offer document containing information on the bid and the bidder. The bidder must secure acceptances over shares representing more than 50% of the target’s voting share capital to declare the offer unconditional. Acceptances over shares representing 90% of the target’s voting share capital are required to squeeze out the minority (and thereby enable the bidder to acquire all of the target's voting share capital). Given that bidders typically aspire to acquire 100% of the voting rights in a target company, it is therefore usual for the acceptance condition to be set at 90% (rather than 50%), but for the bidder to have the option to reduce this threshold to shares carrying over 50% of the voting rights.
A scheme of arrangement is a statutory mechanism which is an alternative to a contractual offer. It is a formal arrangement between the target company and its shareholders, which is governed by the Companies Act 2006. A scheme of arrangement must be approved both by the shareholders of the target company and the High Court. In particular, a scheme of arrangement requires approval from shareholders who constitute a majority in number of each class of shareholders who are subject to the scheme of arrangement and who are voting at the meeting. This majority must also represent at least 75% in number of those shares which are voted.
The main advantage of a scheme of arrangement is that, if successful, it will bind all shareholders (regardless of whether, or in what way, they voted). However, due to the High Court’s involvement, schemes of arrangement are less flexible structures than contractual takeover offers."
JTD, This was all discussed of Friday, but you do not seem to be getting it. So for the third time, I will post what the Take-Over Panel have to say on this.
"Shares carrying more than 50% of the voting rights
The Panel will normally waive the requirement for a general meeting under this Rule where the holders of shares carrying more than 50% of the voting rights state in writing that they approve the action proposed and would vote in favour of any resolution to that effect proposed at a general meeting."
With all the directors backing the take-over there will be virtually no chance of this being blocked when Fortiana get over 50%. And would you really want to be a shareholder in a company whose BoD were looking to sell out at the first opportunity?
" Yes they are pretty mean, but a divi could be throw in as a sweetener for remaining shareholders if things get tricky."
That idea has also been rubbished at least twice in the last few days JTD. It is also clearly stated in the TKO RNS what will happen if a divi is paid.
sasa43 - Yes they are pretty mean, but a divi could be throw in as a sweetener for remaining shareholders if things get tricky.
I don't think you are quite right on the 50%, the takeover panel have the option to insist on 75% if they think that shareholders are being treated unfairly (though they are usually a useless bunch). They can also insist the buyer sells down if they fail to gain sufficient support.
Hi jtd - I think that all they need to do is secure over 50% of the equity (voting control) and the more the sp wilts, the more likely they are to succeed by mkt purchases to get there; provided they don't pay more than the 300p offered to all shareholders.
If they do so to get over the 50%, they have to offer the highest mkt price paid to all holders. It is usual for a bona fide offeror to allow the target co to pay its last divd to their shareholders (goodwill gesture for the ongoing relationship, as much as anything) but this buyer doesn't have that in mind, quite clearly....
Sad for HGM holders all round, imv - sasa.
The offer has not been formally made yet, they will take guidance from the takeover panel - must make an offer soon as it is compulsory.
Our BoD will be advised on what they need to do also, 50% or a 75% majority support requirement - I'm expecting 75% if there is any kick back from other large investors in which case it's game on.
I believe they can also try to buy shares in open market but must secure 90% in that case to secure a mandatory acceptance - please correct me if I'm wrong.
3rd Aug 2020 2:49 pm RNS Form 8.3 - Offer for Highland Gold Mining Limited... ??
I have no clue?
I cashed out on Friday morning at 303. If they get below 290 I'll buy back in again. Whether it comes as an offer price of £3, or and offer (share price plus dividend) of £3 there looks to be a bit of free money in it.
I also feel robbed, but cashed out at 2.99. Would I cash out at 2.92? I doubt it. I hope for the rest of my fellow holders that you get a decent offer. £3 right now is robbery. However, this is AIM....
Looks like a few of these funds happy to sell at 298 to 300 on Friday. Also can't see them being too happy with the minimal 4% premium offer price at a time when funds are increasing their allocation to Gold.
Hi gwm - the mandatory offer for HGM stipulates that if the BoD sanction any divd payment as they were likely to do shortly, then that would be deducted from the 300p cash offer. HGM hasn't yet commented on what they intend to do about that yet, as far as I know...
My best two replacements when we're forced out of this are POLY and the Canadian Pure Gold (quoted on AIM under PUR) fwiw - although POLY are Russian, too, they're in the FTSE100 so that might afford some protection against such shenanigans we're seeing here.
PUR looks particularly interesting at this early stage of its development, sitting right in the middle of Canada's prolific mining belt, Red Lake. Well worth a look - sasa.
Echo that, Batterseafish - that's about the best alternative I've come up with after this HGM hiatus is concluded. PUR's first 'gold pour' is scheduled for Q4 this year and being in a friendly jurisdiction removes the risk of this sort of 'steal' we're now seeing here...
Although it doesn't yet pay a divd, of course, its potential is considerable with impressive grades being regularly reported to augment their growing resource.
It's fully funded with strong Insto backing, too - another Kirkland in the making? Could well be... sasa.
The advantage of POLY is... that the Russians already own it..
From my unserstanding of this dividends will be subtracted from the money you get from £3 offer.
Does anyon on this board know about these situations? Seems hgm price is now locked at about 296 pending finalisation of £3 offer, whilst if the gold run continues other go;ldies will rise.....as today.
aau and poly look the best, prices up today
Sasa. any comment?
Like getting towards £5 - that would be better than £3.
kenj,
I guess the hope is an aggressive activist hedge fund who specializes in this type of thing takes a stake ( underwritten by the 300p offer ) and tries to extort more out of the acquirer or holds on for the strong dividend and an improvement in shareprice. With the current outlook on Gold being hugely bullish I can't see why any hedge fund wouldn't be doing this.
An example of such a fund here
www CNBC com/2020/06/14/hedge-fund-elliott-management-shifts-to-elephant-hunting.html
I suspect that that is exactly the case, and I said as much in an earlier post.
Unless of course, this take over can be thwarted, but I have no idea how.
Is HGM now tethered to 300p (give or take a few p) no matter if the price of gold rockets to say $2200 / oz , in which case this should be over 400p maybe ? Likewise if pog slumps to say $1500 / oz, will we be insulated from a big fall in sp given Fridays RNS ?
Goldman Sachs link.. https://www.bloomberg.com/news/articles/2020-07-28/goldman-warns-dollar-s-role-as-world-reserve-currency-is-at-risk
Of course you couldve given those links yesterday I cannot understand anyone accepting a statement made by a commenter without it being backed.
..Katusa sounds desperate..that Kitco piece was 3 months ago.. a lot has happened in 3 months.. the Ffitch report is 4 months old.. The Outlook changes reflect the pressure on banks' financial profiles from the coronavirus outbreak, lower oil prices and the resulting economic downturn.''.
The coronavirus is not as serious in Russia as it is in the US..the oil price has bounced from nigh on $0 to $40..and economic downturn.. the US is in bigger trouble. The US trade decicit has turned down again and is over half a trillion dollars. Why will other nations continue accept US IOUs?
Goldman Sachs..just last week.. ''Goldman Sachs Group Inc. put a spotlight on the suddenly growing concern over inflation in the U.S. by issuing a bold warning Tuesday that the dollar is in danger of losing its status as the world’s reserve currency.
With Congress closing in on another round of fiscal stimulus to shore up the pandemic-ravaged economy, and the Federal Reserve having already swelled its balance sheet by about $2.8 trillion this year, Goldman strategists cautioned that U.S. policy is triggering currency “debasement fears” that could end the dollar’s reign as the dominant force in global foreign-exchange markets.''
For Goldman to even hint at this... is a warning? and a worry because if the dollar is on its way out the death throes will cause big global disrupotion...from relyimng on the dollar. The Russians & Chinese have been de dollarising. I wonder if the Chinese who used to hold trillion+ in US debt have probably been dumping it for quite sometime!
Now as the election nears will Trump stop handing out cash to voters who can't work?
What does Russia need dollars for.. they are not buying anything from the US.. The gold that the Russian government buys is produced in Russia, backing up the currency!
As for Russian Banks if they are in trouble... thats up to their depositors & shareholders! I dont know what responsibility the Russian government has.
''..Russian strength comes from Russian propaganda..'' What Russian propaganda?
Or is this a continuence of Russian meddling in UK elections etc... none of which has been proven..
Maybe you can provide some proof of Russian meddling & propaganda!
Try Pure Gold based in Canada - more high grade finds and this could turn into another Kirkland