(Alliance News) - The rescue deal for Yorkshire-based Sirius Minerals was approved by shareholders on Tuesday, despite the anger expressed by many who will lose money as a result, PA reported.
The company's chair hailed the outcome as having secured jobs and future benefit for the local community, wider region and the UK.
Shareholders had been nervously waiting to hear whether the Anglo American PLC takeover had been approved.
Following a tense investor meeting in London on Tuesday morning, the stock markets closed with shareholders remaining in the dark over the result.
The vote, meeting and long wait came after Sirius failed to raise the funds it needed for a fertiliser mine, forcing the board to recommend the GBP405 million rescue package.
Typically, a delayed result suggests the numbers are too close to call.
Announcing the result, Sirius said the resolutions had been passed "by the requisite majorities". It said more than 80% of shares were voted in favour of the takeover.
Sirius Chair Russell Scrimshaw said: "The positive outcome from today's meeting secures a return for shareholders, and provides greater certainty in terms of safeguarding the project, protecting the jobs of our employees, and allowing the community, region and the UK to continue to benefit from the project."
Shareholders who attended the meeting at the Honourable Artillery Co in the City of London were told without supporting the deal, the company would collapse.
They were being asked to vote in favour of the 5.5 pence per share offer, despite some paying as much as 25p a share when the company was growing.
But before the votes – which were recorded on pieces of paper handed out at the start of the meeting – several angry investors voiced their concerns to the board.
One frustrated shareholder in attendance said he felt like "we're having a gun put to our head".
Scrimshaw admitted it was a difficult time for all concerned, adding he was "disappointed at the abusive language" that he had read online before the meeting.
Sirius Minerals shares were up 17% at 5.48p early Wednesday, while Anglo American was up 1.0%.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: flat at 6,720.13
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Hang Seng: down 0.2% at 26,245.30
Nikkei 225: closed up 0.1% at 21,100.06
DJIA: closed down 785.981 points, 2.9%, at 25,917.41
S&P 500: closed down 2.8% at 3,003.37
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GBP: down at USD1.2789 (USD1.2809)
EUR: down at USD1.1152 (USD1.1173)
Gold: soft at USD1,634.94 per ounce (USD1,636.30)
Oil (Brent): down at USD52.02 a barrel (USD52.37)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Wednesday's Key Economic Events still to come
0930 GMT UK CIPS-Markit services purchasing managers' index
0930 GMT UK narrow money and reserve balances
1000 CET EU eurozone Services PMI
1100 CET EU retail trade
0700 EST US MBA weekly mortgage applications survey
0815 EST US ADP national employment report
0945 EST US services PMI
1000 EST US ISM non-manufacturing report on business
1030 EST US EIA weekly petroleum status report
1400 EST US Beige Book
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Chinese services business activity declined sharply in February, figures from Caixin showed, amid travel restriction and company closures caused by the coronavirus. Adjusted for seasonal factors, including Chinese New Year, the headline services business activity index fell over 25 index points to 26.5 in February from 51.8 in January, the sharpest drop since the survey began over 14 years ago. A reading above 50 indicates expansion in the sector and one below contraction. "Stagnating consumption amid the coronavirus epidemic has had a great impact on the service sector," said CEBM Group Chair & Chief Executive Zhengsheng Zhong. Caixin said the vast majority of panel members identified the outbreak of the coronavirus as the key driver of reduced activity, with firms facing extended company closures after the Chinese New Year and strict travel restrictions. The Caixin China composite output index dropped to 27.5 in February from 51.9 in the previous month.
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Japan's private sector fell into contraction levels in February at the worst rate of decline since early 2014, with a technical recession now "exceedingly likely", data from IHS Markit showed. The Jibun Bank Japan composite purchasing managers' index fell to 47.0 in February from 50.1 in January. A reading above 50 indicates expansion in the sector and one below contraction. IHS Markit said the decrease was solid and the sharpest since April 2014, which was attributed to a substantial fall in the services sector. The services PMI sank to 46.8 in February from 51.0 in January, which was attributed to reduced volumes of new work.
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The Irish services sector rose for the fourth consecutive month in February, with business activity growing at a three-year high, data from AIB and IHS Markit showed. The AIB services purchasing managers' index rose to 59.9 in February from 56.9 in January, indicating the fastest rate of growth since December 2017. Looking ahead, business confidence in Ireland eased from January's 18-month peak to a three month low, related to uncertainty over an inconclusive general election, post transition Brexit settlement and the coronavirus outbreak. The Irish private sector as a whole continued to build momentum, as the composite output index also rose for the fourth month in a row to 56.7 in February from 54.7 in January.
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Joe Biden's campaign to become the Democrat candidate for US president was boosted by primary wins in many states, but Super Tuesday's biggest prize went to rival Bernie Sanders. The former vice president's campaign received a timely rebound after disappointing showings at previous contests as he emerged victorious in Massachusetts, Alabama and South Carolina, as well as five other states. But Sanders took California as the Democratic Party's once-crowded presidential field appeared to transform into a two-man contest. It was a disappointing evening for Mike Bloomberg whose sole victory was in the territory of American Samoa, while Elizabeth Warren was defeated in her own state by Biden.
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BROKER RATING CHANGES
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SOCGEN RAISES RIO TINTO TO 'BUY' (HOLD) - PRICE TARGET 4100 PENCE
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PEEL HUNT RAISES RESTAURANT GROUP TO 'ADD' - TARGET 120 PENCE
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COMPANIES - FTSE 100
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Legal & General lifted its dividend as it said it achieved its earnings per share target a year ahead of schedule. Legal & General said it has achieved its five-year target of EPS growth of 10% at a compound annual rate in just four years, reporting underlying EPS of 28.66p in 2019, up 16% on 2018 and representing 12% annual growth since 2015. Gross written premiums for the year grew to GBP15.20 billion from GBP12.84 billion, while net premiums earned increased to GBP11.69 billion from GBP10.73 billion. Pretax profit edged up to GBP2.16 billion from GBP2.13 billion. The financial services firm lifted its full-year dividend by 7% to 17.57p. "Legal & General's strategy of Inclusive Capitalism, underpinned by structural growth drivers, has enabled us to achieve our five year EPS growth ambition in four years, growing 58% since 2015," said Chief Executive Nigel Wilson. "Having delivered EPS growth of 16% to 28.7p, dividends up 7% to 17.57p, and a 20% plus ROE, we are well-positioned for the future and we remain ambitious," he added.
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Polymetal International reported a rise in profit for 2019 amid higher gold prices and increased production. Revenue for 2019 rose 19% to USD2.25 billion, while pretax profit surged 45% to GBP618 million from GBP426 million. Average realised gold and silver prices "followed market dynamics" and increased by 13% and 11%, respectively, the precious metals miner said. Full-year gold production totalled 1.3 million ounces, an 8% increase year-on-year, while silver output decreased by 15% due to asset disposals and planned grade decline at Dukat. Gold equivalent production for 2019 amounted to 1.6 million ounces, an increase of 3% on 2018 and 4% above original production guidance.
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DS Smith said trading has continued to "progress well" with no material impact from the coronavirus. Like-for-like corrugated box volume growth has increased during the second half of its financial year, with good performances in Iberia, eastern Europe and the UK. The domestic US business remains "robust", though lower US paper export prices are ongoing amid reduced demand from China. "The group has delivered a robust performance during the period within a challenging macro-economic environment. Whilst we continue to monitor events and work closely with all our suppliers and customers, we have not to date seen any material impact to our business from coronavirus," said Chief Executive Miles Roberts.
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Anglo American reported a substantial decline in rough diamonds sales from its De Beers unit in its second sales cycle for 2020 as it deferred allocations amid the coronavirus outbreak. The London and Johannesburg-listed miner said the value of rough diamond sales in the second 2020 cycle totalled USD355 million. This provisional figure represents a 28% fall from USD496 million reported for the same cycle the year before, and down 36% from USD555 million for the first cycle of 2020.
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Moody's Investors Service on Tuesday downgraded the outlook for Reckitt Benckiser Group's debt rating to negative from stable following the announcement of another GBP2 billion of investments to be made by the company. At the same time, Moody's affirmed the consumer goods firm's A3 rating. The ratings agency said its outlook downgrade followed "the announcement of additional investments of GBP2 billion, most of which will be funded by a productivity programme but also reduce operating margins and free cash flow generation over the next three years". Although this investment will come from "internally generated cash flows" and most investments will not likely be recurring, Moody's still expects the investment "will reduce the free cash flows available to reduce debt, thus limiting [Reckitt's] ability to improve leverage over the next 12 to 18 months".
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COMPANIES - FTSE 250
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Wizz Air became the latest airline to warn of business disruption caused by the coronavirus outbreak. The central and eastern Europe-focused airline said demand for travel within Europe in March has been hit, particularly in those areas more affected by Covid-19. Wizz Air said it has established a "multi-disciplinary task force" to drive further savings to alleviate the coronavirus pressure. "The company's actions have included significant reductions in overhead and discretionary spending, leveraging our highly dedicated staff across our network, allowing us to pause recruitment and non-essential travel, working with suppliers to reduce cost and an effective allocation of our assets to maximize return for the company," said Wizz Air. Subject to a further demand hit from the virus, it said it is mulling cutting network capacity by around a further 10% in the first quarter of its 2021 financial year. "At this point in time it is difficult to predict the extent and the duration of the outbreak and the impact on the next financial year," said Wizz Air.
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COMPANIES - OTHER MAIN MARKET AND AIM
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intu Properties said it has concluded that, after engaging in talks over the past few months, it is "unable" to proceed with an equity raise. "While a number of intu's shareholders and potential new investors indicated their support for an equity raise, the board believes the current uncertainty in the equity markets and retail property investment markets precluded a number of potential investors from committing capital into the business and intu was therefore unable to reach the target quantum at the current time," the shopping centre investor said. intu said it will "continue and broaden" its conversations to discuss the range of options available, which include alternative capital structures and further disposals. Meanwhile, it said it delivered a "robust" operational performance in a challenging 2019 for the retail industry. Shopper footfall in intu centres was up 0.3%, with UK footfall flat. Like-for-like net rental income in 2019 was in line with guidance, down by 9.1%. intu sees a further decline ahead for 2020, but at a slower rate than that achieved in 2019. Independent valuations of intu's portfolio at December 31 resulted in a valuation deficit of GBP2.0 billion for 2019, a like-for-like decrease in value of 22% for the year.
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Wednesday's Shareholder Meetings
Pressure Technologies
Inland Homes
Chemring Group
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By Tom Waite; thomaslwaite@alliancenews.com
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