Proposed Directors of Tirupati Graphite explain why they have requisitioned an GM. Watch the video here.
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The text begins:-
Approval of Pre-Emptive Disapplication Authority
Secondly, pursuant to the 2018 Amendments to the Articles, upon listing of the common shares
of the Company on AIM on February 16, 2021 and conditional upon the continued admission for
trading thereof, the directors also require an approval from shareholders by way of an
extraordinary resolution (being not less than 75% of votes cast at the virtual Meeting) (the “PreEmptive Disapplication Authority”) to allot for cash consideration any Equity Securities (as
defined in the Articles of Amendment) which are not first offered on a pre-emptive basis to existing
shareholders pro rata to their existing shareholdings. Accordingly, the following resolution, if
approved, would authorize the directors to: (i) allot for cash Equity Securities (as defined below)
in connection with an offer of, or invitation to apply for, Equity Securities made not only to existing
shareholders on a pre-emptive basis but also to holders of other Equity Securities (such as
subscription warrants or share options) as may be required or permitted by the rights attached to
those Equity Securities; and (ii) allot for cash Equity Securities which in number represent 25% of
the total number of shares in issue as at the Relevant Date, in each case without first having to
offer them on a pre-emptive basis to existing shareholders. If approved, the Pre-Emptive
Disapplication Authority will expire at the conclusion of the 2025 annual meeting of the Company.
VII, you're always incisive with your posts and I'm sure many of us poor not so into it sods are appreciative but could I ask you to be a bit simpler in explaining what it all means please.
Keep up the good work and thanks
My mind on this is that it was always going to take a larger cash figure than the 25% limitation would bring from existing holders alone, so it's more a mistake that it was in there in the first place.
Personally I don't see too much of an issue with it as the co seem to be trying to include existing holders in the forthcoming raise (albeit limited to those with a piece of paper saying they're professional for now).
Dreamcatcher
The big question is what is going on. What I am picking up suggests that Osisko Development Corporation (ODV), a significant shareholder in CUSN, is needing to raise cash, a lot of cash - up to about US $400m over the next 4 years. This year their free cash flow is forecast to be a negative US$80m. So given that, and ODV's recent big non cash loss, my guess is they are having to tighten their belts and focus their resources on their major projects. This leads me to think they are behind the recent selling of the CUSN shares. Given the scale of the selling, with many times normal levels of volume going through, I think they are making a significant reduction to their 7.75% stake see
https://cornishmetals.com/investors/significant-shareholders/
Given a sale of 5-6m shares should trigger an RNS (as it would take a shareholder through a percentage holding level), someone might argue - as we have not had an RNS - that this cannot be the case. However, Osisko is North America based and I think has form in not following London rules when they previously reduced their holding. The extra volume of CUSN shares going through the market has in the last few days been 10-15mshares. So if I am right, Osisko has reduced their holding to about 5%. I consider they may be forced or even reluctant sellers. The question is where will they stop.
We also know that CUSN has to raise US $177m to fund its very attractive South Crofty project. Some minor part of that is likely to be equity. Fortunately for us, at the AGM the company is seeking permission from shareholders to do so , largely on a pre-emptive basis - see https://cornishmetals.com/investors/agm/
and look at pages36/37/38 of the Management proxy circular
So we will get the chance to do the funding, and continue to hold the same percentage of the company as hitherto.
The danger for us is if pre-emption rights are not preserved. That would probably allow new shareholders to come in and buy shares at a much lower price than we have paid, resulting in a transfer of our value to them and a transfer of voting rights to them at a cheap price. The company IS proposing that we should disapply pre-emption rights for an issue of up to 25% more shares. This is an acute danger for us, the cost of which to us, has markedly increased as a result of the recent share price fall.
My view at the moment is we should vote against the disapplication of pre-emption rights to avoid this happening.
Those who are not invested or now wish to invest, should only be able to do so, if we the owners do not wish to buy the shares ourselves. Those who are not invested or now wish to invest significantly, will of course see it differently as they will perceive that they can "buy a £10 note for a £1 coin" as Pawgee puts it.
I think the other two large shareholders, VBR and Lansdowne, will want to take up their rights, and probably increase their percentage holding .
Argylerich "albeit limited to those with a piece of paper saying they're professional for now."
Not nearly good enough in my book. The company should look after the small non-professional investor. Many local people have put their savings into trying to get this project going, to benefit their communities. I will not be the only one who does NOT want to see them disadvantaged by removal of pre-emption rights.
This is a clear example of why it is so important that the BoD are significantly invested. They should feel the same way as those who have committed to the project from the word go. Johny-come-latelys should not derive a huge benefit at the expense of long-standing supportive small investors. Our board regrettably, do not have large holdings of shares, which is always a warning signal when a proposal to dis-apply pre-emption rights comes up as their motivation is more concerned with obtaining funding than how it is achieved.
Hear hear..
Are they reducing their holding because they got wind of something? I feel the way it's going at the moment, it would be more beneficial now we have had the PEA proven, to put it up for sale. I can see this turning ugly for the small investors.
Vii totally agree re the management having a strong stake.
Can they legally directly open to non "professionals" at this stage of the proceedings?
Argylerich
We can vote for or against the BoD proposals. Because it is so important and critical to who has the value in the company, to be passed, the proposal to dis-apply pre-emption rights needs a 75% majority in favour of removing rights. And that is 75% of those votes cast at the meeting.
Unless I hear a very good reason to the contrary I shall be voting against dis applying pre emption rights.
As to whether they can change, it may be possible to propose an amendment to the proposals presented at the AGM. Why not write to Irene at cornish metals .com to ask? I suspect a costly and time consuming rights issue may be needed for the company to be able to include all investors.
Gingy You would expect Osisko to have a very good idea of what is going on as they have board representation. If they have " got wind of something" that would make them insiders and liable to criminal charges if they are indeed selling. Sell and be locked up?
I suspect, but do not know, they are selling because they do not have the cash they need for their own projects. I also suspect that VBR and Lansdowne would not let them off the hook if they were insider trading. If it is Osisko selling, that would suggest that other major shareholders could also trade now. It will be interesting to see if VBR or Lansdowne come in at some point to buy. But in a raise I would expect them VBR+ Lansdowne, to take up their share and maybe more, and possibly underwrite. If there is something else going on, we should have been told by now. Watch out tomorrow. Friday afternoon is a good time to bury bad news.
Watch out also to see if anyone is shorting.
If there is nothing amiss, then we would see an enormous bounce in the share price at some point.
Sorry I can't be more helpful....
GLA