Member Info for Hounddog10

To be clear in the previous post I am talking about Kretinsky blocking any potential counter bid he does not like.

Isleworth Spy

With his 27% stake Kretinsky is in the driving seat here. There are two ways to takeover a UK listed company:

Firstly, by a Scheme of Arrangement. This was a relatively novel way a couple of decades or so ago but is now the norm. It is a court sanctioned process and requires the target company to recommend the bid as effectively the bidder and target company are working hand in hand to effect the takeover. There is a shareholder vote and 75% of shareholders have to consent to the takeover. The matter then goes forward for Court approval. Note that only the votes of those shareholders that DO vote count in the calculation. So you can get a situation where, if not many shareholders vote, a small number of shareholders can rustle up 25% votes of those voting and block the bid. However, I would have thought nearly all shareholders here will vote and in any event with 27% of the votes Kretinsky can block even if everyone else votes in favour.

The major advantage of a Scheme is that if approved it binds all shareholders and all shareholders are compulsorily bought out, even if they have dissented. Included also in the 75% vote is the vote needed to delist the target company which is usually important.

The disadvantage of a Scheme is the additional involvement of the Court process and if you have a shareholder/s with close to or over 25% who are against you then can stop the takeover. The minority has a great deal of power.

Secondly, a contractual offer. This is the traditional approach and does not involve the Court. For this a bidder needs to get 50% plus one vote of ALL the voting shares (whether they vote or not). The main disadvantage is that even if you get control you cannot force dissenting shareholders to sell unless you get to 90% acceptances in which case there are Companies Act provisions to forcibly buy out the rest (“squeeze out”). You also need to get 75% (on a who votes basis) to agree to delisting.

Again on a contractual offer basis Kretinsky has a significant advantage as another bidder should need to find the 50% within 73% of the total votes and even then Kretinsky can block delisting and squeeze out.

I would be doubtful another bidder will emerge (unless teaming up with Kretinsky). I suspect he will make a higher offer as I have always felt that the political risk of a Labour government for five years is high for him. The CWU are reported to be talking to Labour this Friday about re-nationalisation.

To add to TMS’s post. The 8.3s show opening disclosure positions, required as TMS pointed out, for any investor that holds more than 1%. Such investors have 10 business days from a bid (or here putative bid) to make the disclosure. If they deal they also have to keep the market updated by submitting a form 8.3 by 3.30pm the next day. If they go below 1% they no longer need to disclose. The forms are of interest because they (may) give some indication of the views of major shareholders, through their buying and selling, on the bid (if it comes) and are also of interest if new investors start to come in. If a bid is made and votes are required it also gives an indication of where voting power lies.

There are also form 8.5s which are for market makers who are part of firms involved in advising on the bid. The Panel will have deemed them sufficiently independent of their corporate finance arms (advising on the bid) so that they can continue to market make IDS stock but they have to disclose anything they do on a daily basis.

There will be a lot of these forms going forward.

But they are very consistent…..

Https://www.ajbell.co.uk/articles/latestnews/274939/top-news-daniel-kretinsky-s-ep-group-makes-unsuccessful-bid-ids

Kretinsky rumoured to be preparing a bid. FT article.

There has clear.y been something bubbling underneath all this which has forced some of the bigger long term investors, who are in the know, to sell. Very difficult to know what but likely connected to Tanz government.

The next stage is the court hearing. No date is yet set for that as preconditions have to be met (these are set out in the Scheme Document). Some are procedural and easily in the grasp of Saturn. However, the important ones are regulatory clearances from Kenya and Tanzania. They have Kenya and I am sure Tanzania is well advanced. Once they have Tanzania (and any other preconditions) sorted they will ask the Court for a date for the hearing. The Court hearing will likely be only a day. On the third day after the Court approves the Scheme the shares are removed from AiM trading. The takeover proceeds to shareholders are paid 14 days after the Court hearing.

It is difficult to know when the Court hearing will happen, as dependent on the Tanzanian authorities, but I would guess no later than mid May (and quite probably a good deal earlier).

It is largely procedural now. It is possible that the takeover could fail on a precondition, but rather unlikely. Until taken off AiM the shares can be traded, They will now largely trade on the time value of money discounted for some risk.

Scheme vote 1.00pm, AGM vote 1.15pm. I would imagine an RNS pretty quick after that as is price sensitive information. But perhaps they will only do at end of day to allow for admin procedures.

There are essentially two stages to the takeover. Firstly, shareholders have to vote in favour. Outcome known on Thursday. At the same time regulatory approvals by country authorities are needed along with certain other preconditions being fulfilled for the bid to go through. This is running alongside the voting procedure and there will be a court hearing after the court meeting (this Thursday) to assess if all the preconditions are met. If the vote goes against Shanta the bid falls away. If the vote approves the bid things move onto the second stage which is satisfying all the preconditions to put before the court hearing in order to finalise the court process and so the bid.

The news is simply that they now have Kenyan approval but are still waiting on Tanzanian regulatory approval. I would have thought that is simply a matter of time.

It is all on the vote.

Sorry did not see earlier post.

It is a stupid mistake. If he had sold in advance of buying there would need to be two PDMR notifications. The sale and the purchase.

They must correct it though.

Matty

I had a similar email to yourself from Tom. I am likely to write to him. I am still collecting up points but, having checked, a major one is the complete lack of information (beyond Q4 numbers) on the operational business since the bid. The contrast with recent prior years is very stark eg by now there would have seen R&R statements, WK drilling/resource statements and an update on Singida.

Also recent Annual Report dates have been 29 March 2023, 4 May 2022 (COVID relaxation), 2 March 2021 and 28 Feb 2020.

It is very peculiar to announce a dividend before you have audited published year end figures. I think Tanzania must have no capital maintenance rules because Shanta does not appear to have had distributable profits from which to make the dividends it has made in the past and is making now. But even so. Smacks a bit of throwing everything into the pot. The dividend is not related to the deal. Shareholders would have been expecting to get this size of dividend anyway. I was rather surprised the interim dividend was not raised. But then the Patel bid was ongoing behind the scenes.

Redhill

The RNS tab on this site is not comprehensive. It only shows standard “RNS” notifications plus a couple of other notification systems (PRN and GNW). Sandgrove is using a notification system called BZN which does not appear on this site. I am not familiar with these alternative systems or why this bulletin board is not picking up BZN but you can see all the Sandgrove BZN notifications on the London Stock Exchange website.

Also there are a couple of RNS notifications on the London Stock Exchange website not on here. No idea why.

Harrogate

I think, as Kenj has said, that the Court Meeting on 4th April is essentially administrative to legally recognise the numbers on the vote. It is held at the offices of Vistra Fund Services, Shanta’s Company Secretary and Administrator and so not even in Court itself. I would assume there is some participation by a Court official but probably not a judge. It will not adjudicate on the merits of the Offer unless, perhaps, there are serious complaints about the voting process in which case I would assume there is some mechanism to deal with it. However, it would have to be a very serious complaint indeed to get any attention.

A Court Hearing (date to be determined) then follows. This is designed to deal with certain aspects of the fairness of the Scheme. However, I believe it is primarily concerned with fairness between creditors and shareholders and is largely concerned with ensuring creditors are not disadvantaged by the Scheme. It will not consider whether the Offer by the Patels is a fair one - that is for the shareholders to have decided, based on the Vote.

Takeovers by Scheme have come in over about the last twenty years and are now the main way of effecting a takeover. However, I believe Schemes were never particularly designed for takeovers - they have their roots in situations of coming to a fair conclusion between shareholders and creditors in a punch up in administration/insolvency situations. Their use in takeovers is, I think, because at some stage some bright spark recognised that, in many circumstances, they require less votes to effect a takeover than in a conventional offer. So the involvement of the Court is not quite as central as might first appear.

I agree with others that the Patels are in a hurry to get their Offer accepted before new news has to be broken. The move back of the Court Meeting date from one side of Easter to the other is largely performative.

The original vote is effectively ongoing at the moment. Or in other words, legally, it never stopped. What has happened is that the broker’s administrative processes kicked in for the adjourned Court Meeting before this announcement of an upped offer was put out.

Two of the hedge funds have fallen into line - although only one is on an irrevocable; the other on LoI. What is interesting is the funds that are NOT signed up to vote for the bid.

I suspect the new offer is conditioned by what the Patels can afford.

4/4

Whatever the exact circumstances and facts are (and for whatever reasons) it is hard to see that the delayed voting timetable on this takeover for private investors is moving forward in an orderly manner that brings any credit to the AiM or London market as a whole. A market that is already under considerable pressure. I should say that I do not believe these difficulties are intentional but more an unfortunate coalescence of circumstances in the relatively unusual circumstance of an adjourned Court Meeting.

In terms of the Shanta takeover private investor involvement is not entirely semantic. Clients of just three of the major private client brokers - Hargreaves, Interactive Investor and AJ Bell, at Shanta’s own last count (notably, collectively, still there post bid), own some 21% of Shanta. As you will be aware a Scheme vote can be defeated by a relatively small percentage of investors.

I would suggest the need for the Panel to ask the advisers (Berenberg and Liberum, particularly Liberum as it is the Rule 3 adviser to Shanta) to take control of the situation. The fairest outcome would be for Shanta/Saturn to provide clear guidance and, if necessary, further delay the vote such that there is adequate time for investors to consider matters and not be railroaded into a decision with uncertain information.

Thank you.

3/4

As you will be aware, there is always the option on the Scheme vote (but not on the AGM vote) for shareholders to turn up at the Court Meeting and vote but this is almost always prohibitive in terms of cost and time for the private shareholder (Shanta’s topco is registered in Guernsey). Presumably the Scheme vote cannot be concluded until the Court Meeting occurs but conceivably the AGM vote is done. However, there is no clarity on this.

It should be noted that the Scheme Document states that any adjournment would result in (both the Scheme and AGM) voting deadlines being pushed back with the “remote” voting deadlines and count happening in a similar manner to the original timetable ie two days before the adjourned Court Meeting (so the new deadline being 26 March 2024).

What has happened over the weekend and the end of last week is that major private client brokers have started to issue reminders to their clients to “take action “ and vote again. Deadlines that have been set include the 21 and 22 March 2024, somewhat ahead of 26 March 2024, no doubt for logistical reasons. In other words, very little notice.

Many private investors are now confused as to what they are being asked to vote on. There has been no further instruction from Shanta on voting (or indeed any particular specificity from the private client brokers, who seem to be largely activating standard administrative processes to deal with a timetable that is not in their control). Some private investors are reporting on investor bulletin boards that their initial voting intention has been wiped and they have to vote again. If this is indeed the case, it should not be happening that their initial intention is no longer valid. Other private investors are saying that they can no longer vote on the AGM vote, which may indeed be legally correct but remains unexplained by Shanta.