Sapan Gai, CCO at Sovereign Metals, discusses their superior graphite test results. Watch the video here.
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You have to see this share in the light of where the majority of assets are based (ie Kazakhstan), and where the 2 directors wanting to take it private are from (ie Kazakhstan). They have no intention of getting out under any circumstances, for they believe that it is us, the private investors, who are just here as spectators for a limited period, helping them with our capital, until they gain full control. That is a widely held opinion, I would say, from people who know that country.
Hi All,
I'm just a small time investor and have followed Kaz for 10 odd years.I don't have great financial kowledge as the others that post here do. But I'm really having a problem with this takeover. Kim & Novachuk are very cute guys,but these offers seem odd.
This is just a thought and please tell me if I'm being naive,,,,,,but with these bids they have more than doubled the value of their shares.Would this help any future financing requirements or could they want out before something bad happens ??
Independent Directors have recommended the latest offer of 850p per share plus a special dividend that's now on offer.
These would be the same Independent Directors that recommended the initial offer of 640 per share?
Part of the raionale for this was that the required heavy investment was too much for small shareholders. Does it make any sense, for a company that has a major project which will be a significant drain on cash flow, to then turn around and pay a special dividend that will suck precious liquidity out of the company? Methinks that someone is trying to play small shareholders.
Well .... not seen anything to persuade me to part with my shares - just a series of ruthless and incompetent shenanigans designed to undervalue my investment. So, it's still a hold from me.
Best wishes,
saurus
From the article: “The take-private bid has been based on the argument that shareholders do not have the appetite for the risks of the Baimskaya mine development in eastern Siberia, where costs have risen from $5.5 billion to $8 billion”.
If you don’t have the appetite for the risk, you sell your shares. By definition, shareholders still holding are happy to run the risk.
I’m not so sure RBC are right at all. We shall see. It’s a shame that the opinion drop-down box doesn’t have an option for “I’m not selling”.
Takeover offers are normally at a premium yet Peel Hunt believe that the shares are worth “at least £9.20 per share”. My personal opinion is that, while you can never predict the future, I want to keep my shares, hope that the offer fails and see if the predictions about a supercycle come true. Supercycle or no supercycle, the price of copper should increase. There’s always risk but I bought the shares as I positively welcome the risk (and the reward).
Headline: Kaz Minerals bid raised to £4.1bn
The two biggest shareholders in Kaz Minerals have increased their offer for the copper miner to £4.1 billion and declared they will raise it no further.
The Kazakhstan-focused miner said that an independent committee of its board had backed the 850p-a-share offer that, together with the promise of a special dividend, has a total value of 869p.
Oleg Novachuk, Kaz’s chairman and former chief executive, and Vladimir Kim, a director and former chairman, own just over 39 per cent of the company and have been seeking to take it private since October, when their initial 640p-a-share offer was recommended by the board.
That was increased to 780p a share last month after opposition from minority shareholders and the rally in copper prices. However, shareholder acceptances stand at less than 60 per cent, well short of the 75 per cent needed for the offer to pass.
Novachuk said that the final offer “fully reflects” the change in “copper market dynamics” since October. The take-private bid has been based on the argument that shareholders do not have the appetite for the risks of the Baimskaya mine development in eastern Siberia, where costs have risen from $5.5 billion to $8 billion.
Kaz was floated in 2005 as Kazakhmys. It operates mines in Kazakhstan and one in Kyrgyzstan. It reported revenues of $2.4 billion last year and pre-tax profits of $804 million.
Analysts at Peel Hunt, the broker, said that the new offer “again looks like a mark-to-market adjustment, given the share performance of other copper producers rather than including a control premium”. They believed that Kaz was worth at least 920p a share. They did not believe that the offer represented a “knockout blow”.
Analysts at RBC expected the bid to be successful, “considering the recent volatility and slowing momentum of the copper price”, which meant that the increase “should provide enough incentive for investors to tender at the 75 per cent level”.
Kaz shares rose 24p, or 2.9 per cent, to 864p yesterday.
If there was no take over then surely we would have been paid a dividend. By offering the special dividend as an incentive to accept the offer are they not “bribing” us with our own money. Is this legal?
I never thought I’d experience a takeover bid where you feel as if you are haggling in a bazaar in a tourist district of a Third World city. Tiny increments in price, yet every time still feeling you’re being taken for a ride, and that ludicrous line about urging us to accept the (former) increased offer as soon as possible.
@shakhtar: I agree. I think that the offer has been like a foot on the SP, holding it down. It should increase significantly once the takeover has failed.
The premium for the new offer is negligible and a fraction of the premium normally associated with takeovers.
When the offer was first made, I felt it was trying to snatch an undervalued company away from us. I was annoyed but thought it’d succeed. I’m delighted it hasn’t (so far, anyway).
Fortunately the offer was a few months too late considering the SP movement since then. They may have got away with it had they made it earlier.
I’m not selling. I wish there was an option on the form of telling them where to put it. As one article on the takeover said, “Misers pay twice”.
Just in case anyone reading the final offer RNS doesn't understand this below para. it relates to CFD holdings (save for 100 shares held by Samson Rock), which don't carry voting rights. To obtain the voting rights the CFDs would have to be converted (swapped) into actual shares, e.g. by negotiation with the CFD provider if they are holding (or willing to procure) the underlying security, or by closing the CFD position and using the cash to procure an equivelent number of shares in the market, or from a party holding shares who was prepared to sell. It would only make financial sense for them to do so whilst the s/p is sufficiently below the final offer, particularly because of the situation relating to the dividend 'sweetener'.
"In addition, Bidco has now received non-binding letters of intent from Samson Rock Capital LLP and Alpine Associates Management Inc. to accept, or use best efforts to procure the acceptance of, the Final Increased Offer in respect of a total of 15,002,691 KAZ Minerals Shares, representing approximately 3.17 per cent. of the existing issued share capital of KAZ Minerals as at the close of business on the Latest Practicable Date (the "Letters of Intent")."
Julian, the offer is 850p, so, at pixel, the shares are it is already trading over the offer price. The 27cents (appx. 19p) dividend is not guaranteed at this point in time.
AJBell Youinvest seem to be behind the times, my latest offer dated today still quotes £7.80.... but the share price does indicate people are accepting £8.69. I hope it climbs over the offer price soon.
For such a well run company they are behaving like muppets over this take over. I intend to carry on holding.
ATB
Bottled
Offer is abysmal, hope it gets rejected, What a circus...
Shaktar, I appreciate all the posts you have contributed to this issue. It makes a refreshing change to read a knowledgeable post. Thanks.
Shaktar totally agree, I have been through too much with Kaz held from the highs of the Kazakmys days. I'm holding this is the time for Copper we are worth/valued at circa £11 all day long .
There we have it, price increased to 850p plus a special dividend making it 869p in total. That is still too low. I suppose they don’t have any more money so it’s the best they cam do. Will this increase convince enough shareholders to accept and get Nova over 75% target? I don’t think so. That is not a compelling offer imho. Provided copper price stays at current levels shareholders are likely to see KAZ trading at £10 as soon as the bid falls away, once KAZ sp no longer restrained by this bid catches up with its copper peers, and by Feb next year sp should reach £13, imho. So I’m keeping my shares. GLA. DYOR.
Shakhtar, thanks for the analysis. But do you not think a wounded animal with 59% of the kill is far worse than one with 39%. Granted they would have to pay for the extra 20% now for 869p instead of 780p. How likely are they to walk away if they don't get 75%?
You are welcome Qwerty, and Fresian too, I'm glad I can help.
And looks like FT are also thinking that an increased bid is coming today:
https://www.ft.com/content/f5b98591-6cd4-46ec-a6db-a8c9d8c202e6
Can't wait! (https://www.youtube.com/watch?v=mzAfTmC3It0)
Wow that’s an incredibly valuable insight Shakhtar,I’m just glad there are people like you on this board who know what’s what. Admittedly I’m not to smart, but I work bloody hard for my money, and well it’s not a good feeling getting taken for a ride and fleeced...So Shakhtar thanks and know your views/ opinions always well appreciated and valued
Fresian: if 75% is not reached by 9 April Nova will have two options; the first is to accept defeat and walk away, and the second is to change their minimum acceptance condition to whatever percentage of acceptances they will have received by then (as long as it is at least 50%).
If they choose the former, the offer is terminated there and then and they cannot buy any shares, not even from those who accepted their offer, so they will remain at 39.6% they had before the offer. They will also have to walk away for at least a year, after which they can come back and table a new offer to the shareholders.
However, if they choose the latter, that is to lower their acceptance condition to, say 59.3% (current level of acceptances), then they can proceed to buying shares from those who accepted the offer (at 780p). However, they will not be able to delist the company as they will not control enough votes to do so (75%), so all they would have achieved is to have increased their stake from 39.6% to 59.3%, which wouldn't be a bad result, but... I actually don't think they will choose the second option because I don't believe VTB will lend them money in these circumstances, but I don't know, so in theory it's possible, but in practice unlikely.
Either way, if they don't get to 75% they don't have any options to take the company private. They would need to come back in a year's time with a new offer and try again. Which is why, in my opinion, I think they will raise their bid tomorrow, probably substantially (my guess is 920-940p) and will declare it best and final. If they do that, they might just have a chance to get to 75% by 9 April and take the company private... We shall see tomorrow... GLA
All IMHO. DYOR
Hi Shakhtar, thanks for sharing your analyses of the takeover offer. Your insight into the mechanics is very valuable.
Should the Nova offer fail to reach the required 75% acceptance, will it be terminated on 9th April? And in your experience, what other options would Nova then have to take the company private?
It seems that the higher market price may prevent them doing so?
Thanks
Lovely rise in the share price today, don’t think these buyers will be giving their shares for 780! Now who said Miserly will pay twice...
Loads! Circa 70m. Maybe who are "behind the buys"?