Times Today4 Feb 2020 08:40
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One of the biggest shareholders in Sirius Minerals has called for the North Yorkshire fertiliser mine developer to pursue alternatives to a £405 million takeover by Anglo American.
Jupiter Asset Management, which controls about 7.8 per cent of Sirius shares, urged the company’s board to explore a rival approach from a consortium of financial investors offering $680 million of debt-based funding. Jupiter said that it wanted a proposal that “would enable shareholders to remain invested in the project”.
Sirius has already recommended the Anglo takeover as the “only feasible option” to save its project and prevent it going bust, wiping out investors — including 85,000 retail shareholders — altogether.
The miner believes that the alternative, debt-based funding proposal is “not acceptable”, for reasons including that it would have required the company to “undertake a substantial new equity-raising”.
Sirius Minerals is developing the Woodsmith mine near Whitby to tap a huge resource of polyhalite, a nutrient-rich fertiliser, from about a mile beneath the North York Moors National Park. The project would be Britain’s biggest new mine in decades. Sirius has already invested more than $1 billion in developing the project, but it requires more than $3 billion in extra funding to get the mine to production.
It launched a strategic review in September after failing to complete a $500 million bond issue and it recommended a 5.5p-a-share takeover by Anglo last month after concluding that there were no other viable options.
The takeover by the FTSE 100 miner will crystallise heavy losses for many investors, who saw shares trade as high as 37p less than two years ago.
Jupiter Asset Management is invested in Sirius primarily via its Jupiter UK Growth Fund, which had £996 million under management at the end of 2019, at which point Sirius accounted for 1.6 per cent of its portfolio. The fund, managed by Steve Davies, has significantly underperformed the FTSE All-Share index in recent years.
It is also invested via the Jupiter UK Growth Investment Trust, a listed trust valued at just under £50 million, of which Sirius accounted for about 1.4 per cent of the portfolio as of the end of December. This also is managed by Mr Davies, although its board said last year that it was reviewing “alternative arrangements” for the fund after several years of underperformance. Mr Davies called on Sirius’s board to “pursue any alternative options, including the consortium of financial investors who submitted a proposal for a $680 million funding package earlier in January”.
Jupiter declined to comment on how he would vote on the Anglo proposal, which is due to be put to shareholders shortly and requires approval by 75 per cent of Sirius shareholders.
In a letter to Share Soc, which is acting for several individual shareholders, Sirius said that the alternative debt-based proposal, which was indicative and non-binding, also would have req
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