Member Info for Hounddog10

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As you will be aware there are normally two votes on a Scheme, as is the case here. One specifically on the Scheme and another an AGM vote on amending the Articles of Association in order to effect the Scheme.

The “remote” electronic vote on both motions (the remote electronic vote being the

relevant one for private investors) on the takeover was scheduled to complete on 27 February 2024 at just after midday with the Voting Record Time happening at 6pm that day. The Court Meeting to give legal effect to that vote was to be held two days later on 29 February 2024. At 7am on 29 February 2024 Shanta released an RNS saying that the Court Meeting was expected to be adjourned to 28 March 2024. No explanation was given as to the reason other than it was:

“Following feedback received from Shanta Shareholders in connection with the Scheme,”

The status of votes already cast and, presumably, counted on 27 February 2024 was not explained. On 3.20pm on 29 February 2024 Shanta released a further RNS confirming the adjournment of the Court Meeting and stating that, in the meantime, shareholders should take “no action”:

“As disclosed in the Adjournment Announcement, it is expected that the adjourned Meetings will be reconvened and held on 28 March 2024 and a further announcement detailing the timetable in relation to the adjourned Meetings will follow in due course. The Independent Shanta Directors recommend that Shanta Shareholders take no action at this time.”

There has been no “further announcement”.

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SHANTA GOLD LIMITED

I write in relation to the potential takeover of Shanta Gold Limited (“Shanta”), an AiM admitted and traded company that mines gold in Tanzania, and to draw your attention to certain matters. To put it mildly, this a controversial takeover by an insider (a non executive director) and his associates/family. The SPV being used is Saturn Resources Ltd (“Saturn”), a wholly owned subsidiary of ETC Holdings (Mauritius) Limited, a private conglomerate. The takeover bid was only at a negligible 6.72% premium to the then share price and was announced on 20 December 2023. So the announcement was immediately before the Christmas break when the City is almost completely closed down for a fortnight.

The takeover is by way of a Scheme of Arrangement (“Scheme”) with, somewhat inexplicably, given the minimal premium, a recommendation by Shanta’s Board of Directors. As is normal, a Co-operation Agreement between Shanta and Saturn was signed on 20 December 2023. So, as you know, Shanta and Saturn are, more or less, in lockstep and working together.

Kat-079

A good point. I think what we are seeing is a disconnect between the brokers and Shanta/Saturn. My guess would be that Saturn is still fighting it out with the new investors on a deal and, as yet, has nothing to say. In the meantime, however, with the adjourned deadline fast approaching the brokers have to get their administrative processes going and send out reminders.

Harrogate

Yes, I too yesterday got the Interactive Investor notification. I am not entirely sure what is going on. My suspicion is that because the vote is still active (per previous posts) that this is an administrative reminder sent out by the brokers to advise investors of their right still to vote. In other words the brokers probably do not know what is happening with the Patel bid but have to assume that it is still going ahead on the adjourned timetable. Even if they contacted Shanta to get some clarity, I cannot see Shanta/Patels saying anything if still in discussion with the new investors.

As others have said it is probably best to vote again. Your previous vote should still count (and you can change your mind) but to be absolutely sure best to vote again.

I would note that my notification requires me to vote by 22 March. This is puzzling as per the Scheme Document the deadline should be two days before the adjourned court meeting ie 26 March but perhaps for admin reasons II requires an earlier date. The other brokers may also have determined different voting cut off dates.

All a bit of a mess.

Https://www.express.co.uk/finance/personalfinance/1877417/Halifax-Lloyds-Bank-of-Scotland-bank-closures-full-list

To which may be added that Q1 results came out on 24th April last year. Q1 should be good given that in the comparative period Singida was not operating and the good price is a good deal higher. A revised R&R and Singida drilling results has been promised before then. Both might be hoped to be positive. The Patels are no doubt hoping to seal the takeover before then.

The RNS is for Berenberg not Saturn. Saturn cannot buy. Berenberg is Saturn’s corporate finance adviser on the bid. As a result Takeover Rules have deemed Berenberg, as an organisation, to be a concert party acting with Saturn. This captures Berenberg’s market making activities as well as its corporate finance ones and they get subject to certain Takeover Panel rules, one being they have to disclose their daily positions on Form 8.5.

Although nominally deemed to be in concert with Saturn I think what Berenberg is doing is normal market making. It will be selling to a variety of parties without necessarily knowing their intentions. Although Berenberg is relatively active, its dealings are not that big in terms of overall volume.

I think under Takeover rules Berenberg either cannot vote any shares it holds or, if it were to vote, has to vote against the offer.

The Patels are not permitted to buy. You never quite know if they have a proxy that may be helping out but I think it unlikely.

The Patels must have now lost Lombard’s letter of intent for 8.6% of votes. They will have to get them onside again. A rather curious aspect of Lombard’s position is that post Announcement and up to the publication of the Offer Document they bought an extra 10m shares but for some reason those shares were not subject to the LoI in the Offer Document.

Kenj

Thanks. No worries. I agree the Offer Document is not very helpful. Great deal of repetition but with important stuff hidden in footnotes. I think, following your post, and having looked at it again the vote on the AGM is probably not yet concluded. An important time and date was the Voting Record Time which was at 6pm on the 27th. It says in footnote 4 (page 13) that on adjourning the Court meeting this gets pushed back. As adjournment was announced first thing on the 29th one might have expected the VRT to have occurred but I take from the footnote that even if did the vote is not legally concluded until the court meeting confirms it. So likely no 21 days notice is required for either the AGM or Scheme vote.

I have rather given up trying to analyse it now. Events are starting to overtake the Patels. We are in an unusual situation and what happens in terms of process will likely be determined by the Panel, rather than on the pure legals. Staffed as it is by investment bankers on secondment but with some lawyers the Panel tends to take quite a broad rush approach and looks to overall fairness.

The top six institutions now control almost 25% of voting shares. All those (14 shareholders) who have declared holdings above 1% now control almost 38% of voting shares. I don’t imagine many, if any, are on the side of the Patels.

Kenj

To clarify I think the AGM vote is closed. That closed on the 27th and there was no ability to vote at the Court meeting on the 29th.

I am rather less sure as to the technical legal position on the Scheme vote. Yes, from an administrative point of view the initial deadline was the 27th but voting could be done by attendance at the Court meeting and I think you could also change a vote already cast if you attended the meeting (not entirely sure of this). So this means theoretically anyone, not just the big boys, have the ability to vote until the Court meeting. So, as long as the Court meeting is delayed, there is the technical legal, if not practical, ability to vote.

There is a current example of where voting has been extended on an upped offer (and notice given that you can change your existing vote). The difference to here being that the “administrative” deadline had not yet passed but I think it is the Court meeting date that matters legally.

I do not think there is (necessarily) a requirement to have a new Offer Document, or a supplement to the Offer Document (it is not a prospectus - that is for issuing shares or listing on a regulated exchange) for simply a change in the bid price. However, it might be for other factors - such as any materially changed circumstances, the BoD having to recalibrate the basis of their recommendation etc.

My suspicion is that even if the Scheme vote is technically ongoing the AGM vote has to be revisited with 21 days notice and thus the administrative date of the Scheme vote will be formally extended via an extended deadline. In particular if the Court meeting is now a month away it does not seem right that shareholders should be held to decisions they made some time ago - particularly if circumstances are beginning to change.

Kenj

Yes, you are correct that the voting carries up to the court meeting (if in person - and only in relation to the Scheme vote and not the AGM vote - although both are so interrelated that if the Scheme vote is defeated it does not matter that the AGM vote goes through). I was wrong to say the cut off for voting was the 27th. I think therefore it is likely to be correct to say that the vote is suspended but still “live” and not subject to a revised timetable of 21 days notice. There has been no notice that you cannot still continue to vote..

However, I am not sure it is correct to say that anyone who has already voted cannot change their mind while the vote is still ongoing (ie prior to the rescheduled Court meeting).

Kenj

Thank you. To try to clarify some thoughts.

There was no meeting per se on the 27th, only a deadline by which to vote. So I am not sure there was a meeting capable of being cancelled. The vote count was then to be formalised before the Court on the 29th so that the Scheme could go ahead to the next stage, being the Court hearing, (if approved).

The question then is what is the status of the votes that were cast. There WERE votes that were cast and I think they only would have become legally recognised at the Court meeting on the 29th. I think therefore I am with you (but not sure) that the likely status is that the current votes are “in suspension” pending confirmation at an adjourned court meeting (and before which other votes will be cast, or existing voting intentions changed).

To some this may seem a semantic discussion but it runs to timetable. If the current vote is still “live” then, perhaps, the Patels do not need to give a formal 21 days notice of a new vote but can work to a shorter timetable.

I doubt HL really know. They don’t have the expertise. It is a legal/corporate finance matter. The situation is quite unusual. Normally you would expect a failing bidder to raise their bid BEFORE the vote or to withdraw completely. It can only be guessed that the Patels are fighting it out on price with the newcomer shareholders and trying to work out how much they can afford.

Significant block share purchases today - 4m plus. Likely find out on Monday who is buying. Quite probably Samson Rock. Must assume they know the direction of price negotiations.

Do we definitely know the vote was cancelled? I cannot identify any announcement. Only that they put out an RNS the day after the day of the vote which said the court meeting was postponed. They were silent as to what happened on the vote.

That certainly was my assumption but I am not sure they will notify as they haven’t explicitly said what they are up to by adjourning the court meeting. We don’t even know about the vote on the 27th. We have to assume it happened and the Patels lost. Or did they pull the vote at the last minute?

A bit of a mess. I hope the Panel is watching this. Their rules are aimed at having clarity during a takeover process and not having a company in limbo for a long time. There is a real danger the board is not concentrated on the underlying business at the moment.

Yes, I think the pushback of the original timetable was predicated on a new vote being notified around now (new offer sorted out in a week and three weeks notice required for a new vote). However, the court meeting date can always be pushed back again. I suspect the Patels are struggling.

Very broadly:

- Can’t buy at a price that is 5% higher than the average of the previous five trading days

- Can’t buy at a price higher than the last trade

- Can’t buy more than 25% of average daily volume (defined as over the last 20 trading days or if the daily volume was specified in the buyback programme)

Practical effect is that if the price is rising steadily difficult to buy back. Will only be doing so on intra day dips. If price rising strongly may not be able to buy back until price flattens or drops. Easiest when price falling, but then 25% limit.

May be other parameters, as set by Lloyds,in the algo.

If the gold price keeps going up and the mechanics of the bid look to be further delayed I was wondering if the board can maintain their recommendation for the bid at the current price. I suspect it is rather difficult to withdraw but presumably there comes a point. Don’t know the answer.