The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/SXX/14456551.html
Yes, not the usual hedge fund. Interesting
My wife and I were there too - very sorry to the lady who we spilt coffee on if she’s reading, most embarrassing!
I hope Mark Cutifani is able to see good reason to increase the Sirius Minerals offer price a little – even though there is absolutely no need to do so now the scheme has been approved. If I encountered Mr Cutifani dying of dehydration in the desert then the offer of a bottle of water priced at £1m would of course reflect the gravity of the situation he was in. It would be a sad advertisement for humanity though and I hope he takes the opportunity to think about that and to gain the upper hand. Anglo’s relationship with communities around the project sites will be important.
This is exactly what I said:
If it’s a No then Anglo are obviously frozen out and can’t increase their offer – all they can do is hope that it goes into admin or put in a contractual offer (hence Polygon not going above 10%).
Please check out page 79 Section 10.2.
https://www.cliffordchance.com/content/dam/cliffordchance/PDF/takeover_guide.pdf
If the vote it No, they can walk away or put in a 'Contractual Offer' as I said.
Because they know that the 75/25% part of the vote is unlikely to be swayed by their 1.8%. That's why I asked about the No voters - did they sell up today or greatly reduce on Friday? Either way, they're not going to have much voting clout on number of shares and I don't think anyone ever expected the scheme to be defeated in that way. It's going to be the Majority in Number test and in that Odey have just one vote the same as everyone else (who turns up or appoints a proxy).
I posted some info on what the hedge funds were very likely up to last night and repost that below for convenience if anyone is interested. Further to that it seems as though Odey are not unduly concerned about a No vote as they continued to buy on Friday. Perhaps they think private shareholders will jump on the back of their logic and vote Yes in order to promote competition and a better offer. If it’s a No then Anglo are obviously frozen out and can’t increase their offer – all they can do is hope that it goes into admin or put in a contractual offer (hence Polygon not going above 10%).
If your view is that ‘it’s about the principle’ then voting No is understandable. I just hope that you’ve followed one of two strategies in case there are no other bidders:
Sell up today having already voted and been eligible to vote by virtue of still holding on the record date (last Friday).
Sold the vast majority of your holding and retained a few shares in order to vote at the Court Hearing and defeat the 50% ‘Majority in Number’ test.
It would be interesting to hear how many people have chosen one of the above approaches?
Polygon had a short position of 70.5m CFD’s when the possible offer was announced early in Jan and quickly closed that then started to open a long position and eventually amassed 690m CFD’s at an average price of 5.42p. Recently they converted 60k CFD’s to shares in order to vote at the Court Meeting. Their CFD’s are fine for voting at the General Meeting though as long as they agree that with the owner of the shares at the point of taking out the contract. A bit of research is needed to establish why the CFD’s aren’t going to count at the Court Meeting – Odey knew that which is why they closed their 1.3% CFD position and opened a 1.3% share position on the same day to make sure they could carry out their threat to vote against the deal.
It seems to me that Polygon are of the belief that there is likely to be a counter offer between the Court Meeting date and the Court Hearing date. They need that to make any profit because when you add daily charges to their CFD position it will be above the 5.5p offer price. Odey obviously think the same and stated as much in their open letter. There’s another couple of hedge funds probably of the same view (Alpine and Oasis). Interesting that Polygon have kept their holding marginally below 10%. They’ve most likely done that in order to allow contractual counter offers to be put forward. Above 10% and that would have made it too costly for the bidder.
All of this was looking good for the hedge funds but they clearly didn’t believe that people would vote No! They’ll be hoping that there’s more than one party ready to put forward a counter offer because the share price is clearly going to be low if the deal gets voted against! If there’s only one other bidder after a No vote then their offer is not likely to be great based on a very low share price. If there aren’t any other offers at all then the hedge funds are going to make big losses – they really needed the vote to be Yes in order to get some competition going without the risk of big potential losses.
Polygon had a short position of 70.5m CFD’s when the possible offer was announced early in Jan and quickly closed that then started to open a long position and eventually amassed 690m CFD’s at an average price of 5.42p. Recently they converted 60k CFD’s to shares in order to vote at the Court Meeting. Their CFD’s are fine for voting at the General Meeting though as long as they agree that with the owner of the shares at the point of taking out the contract. A bit of research is needed to establish why the CFD’s aren’t going to count at the Court Meeting – Odey knew that which is why they closed their 1.3% CFD position and opened a 1.3% share position on the same day to make sure they could carry out their threat to vote against the deal.
It seems to me that Polygon are of the belief that there is likely to be a counter offer between the Court Meeting date and the Court Hearing date. They need that to make any profit because when you add daily charges to their CFD position it will be above the 5.5p offer price. Odey obviously think the same and stated as much in their open letter. There’s another couple of hedge funds probably of the same view (Alpine and Oasis). Interesting that Polygon have kept their holding marginally below 10%. They’ve most likely done that in order to allow contractual counter offers to be put forward. Above 10% and that would have made it too costly for the bidder.
All of this was looking good for the hedge funds but they clearly didn’t believe that people would vote No! They’ll be hoping that there’s more than one party ready to put forward a counter offer because the share price is clearly going to be low if the deal gets voted against! If there’s only one other bidder after a No vote then their offer is not likely to be great based on a very low share price. If there aren’t any other offers at all then the hedge funds are going to make big losses – they really needed the vote to be Yes in order to get some competition going without the risk of big potential losses.
It would be nice if Polygon could answer your question - they bought 690m CFD's at an average of 5.42p (they'd need more than a yes vote to make a profit with the daily charges on CFD's I think). They converted 60,000 to shares very recently in order to attend and vote it seems
See Slide 11
https://siriusminerals.com/site/assets/files/6379/sme_annual_conference_and_expo_2020_rev_1.pdf
A higher bid can be accepted after the Court Meeting on the 3rd but before the Court Hearing (before the 20th March but date not yet decided). Read the open letter from Odey, they think that's when a higher bid is most likely going to occur.
BBC Look North Yorkshire ran a piece about funding for Sirius in the form of IPA guarantees (on the 2nd September 2019 from memory just a couple of weeks before the bond was pulled). Can't recall the exact wording but something like 'government looks set to back Sirius'. It mentioned that Boris Johnson was keen to see the project go ahead. I wish I'd downloaded it!
Pelham sold before the Friday RNS but none after
Polygon increased their long position on Friday but this was after the 11:51 RNS as can be seen from the price paid:
https://otp.tools.investis.com/clients/uk/sirius_minerals/rns/regulatory-story.aspx?cid=485&newsid=1371918&culture=en-GB
My understanding is that the takeover code still allows them to make a 'Contractual Offer' if the Scheme is voted against
I agree,
As the share price drops in fear of a No vote, does it become more likely or less likely that equity can be raised to resurrect the Consortium deal?
The announcement on Friday stated that “The Board confirms that the Company has not been able to secure an institutional anchor investor willing to provide SUFFICIENT support for the Alternative Proposal which was part of the consortium's requirements”
It would be good to have a running total on the fundsirius.com site. I suspect it's some way off the $600m