Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
Good point, Falcon. This is indicative of the deal going through. If they got to 75% we should see the announcement later today
Yes you do
Still irrelevant now. And you didn't need to bother changing your name, Rastuss ;)
What's the point of your post, OofyProsser? It's all ancient history, all well publicized, and whether it was true or not, the company has undergone massive transformation over the 15 years since these publications (which period, by the way, included a sale of 11% stake by Mr. Kim - ever wondered why?). If this was even true, it doesn't matter anymore.
There we have it, price increased to 850p plus a special dividend making it 869p in total. That is still too low. I suppose they don’t have any more money so it’s the best they cam do. Will this increase convince enough shareholders to accept and get Nova over 75% target? I don’t think so. That is not a compelling offer imho. Provided copper price stays at current levels shareholders are likely to see KAZ trading at £10 as soon as the bid falls away, once KAZ sp no longer restrained by this bid catches up with its copper peers, and by Feb next year sp should reach £13, imho. So I’m keeping my shares. GLA. DYOR.
You are welcome Qwerty, and Fresian too, I'm glad I can help.
And looks like FT are also thinking that an increased bid is coming today:
https://www.ft.com/content/f5b98591-6cd4-46ec-a6db-a8c9d8c202e6
Can't wait! (https://www.youtube.com/watch?v=mzAfTmC3It0)
Fresian: if 75% is not reached by 9 April Nova will have two options; the first is to accept defeat and walk away, and the second is to change their minimum acceptance condition to whatever percentage of acceptances they will have received by then (as long as it is at least 50%).
If they choose the former, the offer is terminated there and then and they cannot buy any shares, not even from those who accepted their offer, so they will remain at 39.6% they had before the offer. They will also have to walk away for at least a year, after which they can come back and table a new offer to the shareholders.
However, if they choose the latter, that is to lower their acceptance condition to, say 59.3% (current level of acceptances), then they can proceed to buying shares from those who accepted the offer (at 780p). However, they will not be able to delist the company as they will not control enough votes to do so (75%), so all they would have achieved is to have increased their stake from 39.6% to 59.3%, which wouldn't be a bad result, but... I actually don't think they will choose the second option because I don't believe VTB will lend them money in these circumstances, but I don't know, so in theory it's possible, but in practice unlikely.
Either way, if they don't get to 75% they don't have any options to take the company private. They would need to come back in a year's time with a new offer and try again. Which is why, in my opinion, I think they will raise their bid tomorrow, probably substantially (my guess is 920-940p) and will declare it best and final. If they do that, they might just have a chance to get to 75% by 9 April and take the company private... We shall see tomorrow... GLA
All IMHO. DYOR
I wouldn't be surprised if this debacle is in fact of their advisers doing. With VTB providing debt financing and VTB Capital advising Nova, there's a conflict of interest right there. VTB stands to make huge upfront fees on providing debt availability for the bid, forex hedges etc. - likely to be as much as $100m in total, whether or not the deal happens. VTB Capital as a lead advisor on the transaction are probably on a much smaller success fee, likely no more than $10m. So, using those numbers, If Nova was to succeed, VTB as a group would make $110m but would take a massive risk on providing an enormous debt package of up to $5.5bn to an already highly leveraged company. If Nova fails, VTB would still make $100m without having taken any debt risk. I'm amazed how Nova don't see this! Not to mention that VTB are not experienced in these types of takeover deals, so probably out of their depth. Nova should have had an experienced advisor, independent of the debt provider, or at least if VTB forced them to use VTB Capital, they should have had a second opinion from another firm. This bid will become a case study on how not to do the buyouts. Hilarious.
Shares trading up on announcement in subdued copper price environment and other miners opening flat or down is a further proof that market thinks the offer is too low and will fail, and importantly is a sign that the share price will move substantially higher when the bid finally fails
So we have no raise. Offer extended one last time to 9 April, the maximum allowed 60 days, but no increase in the bid price. How stupid is that! They got 0.03% of new share acceptances over the last two weeks. Are they really hoping that copper price correction brings a flood of acceptances in the final two weeks? I don’t think so. Just read the article I posted in my previous post.
Of course they can still raise the bid, but they have to do it no later than this Friday. If we don’t see a new announcement with a substantial increase by the end of this week, this takeover attempt is now surely destined to fail. Not long to wait now.
Here are some timely thoughts on copper by one of world’s largest copper traders, ahead of Nova’s revised (or not) bid in a few hours:
https://www.mining.com/web/trafigura-sees-green-copper-supercycle-driving-prices-to-15000/
Well that was a resounding NO from shareholders to Nova's 780p offer!
Here in Kazakhstan people don't get much opportunity to see democracy in action, so good to see (and Rastuss will be particularly pleased) that Kazakh oligarchs are getting a lesson in democracy from the western investors. Of the 50% of shareholders who were free to vote (I exclude those "Nova's friends" who signed the irrevocable undertaking), only 9.2% accepted the offer while 40.8% said "Thanks, but no thanks!". That is almost 82% of minorities rejecting the offer. That is the clearest message yet to both Nova and the so-called "Independent Committee" that shareholders are no fools.
Given such a poor result for Nova, I fail to understand their tactic of extending the offer to 23 March without raising the price now. What are they hoping for? That the copper falls and market corrects in the next two weeks, and those who rejected the offer would suddenly change their mind? Surely those are long term shareholders (most of them anyway) and if they decided to keep their shares, they are unlikely to change their mind just because a correction might happen in the near term. And I doubt very much copper would reverse its trend in the next few weeks anyway. So why prolong the agony? Either increase your offer now or walk away. The increase to the bid is surely now inevitable! To get to 75% they would need to offer £10 at least, otherwise the offer is clearly destined to fail (IMHO, no advice intended).
I would love to have been in London in April so I could come to the AGM and see the directors (and Andrew Southam in particular) squirm when grilled by shareholders on how they let this debacle happen. Because those 40.8% of shareholders who rejected the offer will surely now be voting against reappointment of those not-so-independent directors who have been trying to shove this offer down their throats, first at the outrageously low 640p (how dared they!), then at still unacceptably low 780p, while all this time pretending this was a fair price for a company that's set to generate $2bn EBITDA in the current year. Will they face this embarrassment? Or is Nova going to save them from this by increasing the offer? That of course depends on how deep Nova's pockets are. It looks like they can increase the offer to at least 925p with the money they've got from VTB Bank. Surely they can go into their own pockets now to up the bid to £10 and get it over and done with. Otherwise, please, just walk away and let the market set the fair price.
DYOR. GLA
Bobsdad, they cannot get to 75% AFTER the offer closes as by definition it will have been closed to any further acceptances. If they don't get to 75% before the offer closes (currently 9 March), they have an option to extend the offer period (up to a maximum of 9 April). If at any time while the offer is open they get to 75% they must announce this and then have to keep the offer open for further 14 days (even if they get to 75% on the final day of 9 April). You will then have 14 days to either sell your shares in the market (if the price is higher than their offer) or send your acceptance form in and get the offer price once the deal closes.
I think it doesn't looks like they can get to 75% by 9 March as SP is staying well above the offer price, but still a few days left so who knows. If they don't, chances are they would have to up the bid, and if not on 9 March, then certainly in a few weeks after that and well before the final deadline (9 April) so to give people chance to accept an improved offer. If they don't raise the price, I think their offer will fail. Time will tell.
I meant it would make your views more interesting (that's not the right word as any views are interesting, perhaps more pertinent, of more weight) if you were indeed a former employee, as I suspect. That's what I meant. Your interest in this company is puzzling and can only be explained by a personal experience of the company or its principal directors or shareholders. That would certainly make your views more pertinent as you'd have some "inside" knowledge of the workings in the company or the character of its decision makers.
Being too negative (just as being too positive) is not a problem if that view is supported by facts, analysis or stated assumptions. It becomes a problem when such view is driven by a personal agenda. Overly negative or overly positive opinions based on somebody's personal agenda obscure the true picture and mislead the readers on this board, most of whom are here because they are invested.
It's alright, Qwerty, he (or she) has a right to express his views. I suspect he is a former disgruntled employee, as he does seem to know quite a lot about the company and its shareholders, as otherwise, as you say, why keep on following and commenting on this board but never investing. In fact, that would make his views worth hearing... How did Mr. Kim or whoever wrong him - that I'd be interested to know
Thanks Rastuss, I live in Kazakhstan. You are welcome to come visit )
Who needs a 4c dividend anyway! I'd rather they keep it so share price goes up further. I'm in this for price appreciation, long term, not dividend. It's a growth company, as was reminded by Baimskaya purchase to those who thought otherwise. By my estimates, if copper price averages $3.75/lb in 2021 (and it is currently at $4.3!), KAZ will make $3bn of revenues and $1.9bn of Ebitda. Net debt would drop to $2bn. At just 5.5x EV/Ebitda this should get the share price to £13, which would still be only 0.8x P/NAV on my numbers. I'd probably start reducing my holding once we hit £12-13, but I wouldn't fully exit until it hits £15. No advice intended. DYOR
Bakered, as I said before, I am keeping my shares and remain of the view that the bid will fail. And I am not alone, and if you look at recent announcements, RWC, who have been vocal about how low and unacceptable this bid is, have actually increased their holding over the last month (including today). So did Vanguard, who only had just over 1% a few monhts ago and now increased their holding to 2%. Samson Rock keeps buying, too, increasing their holding to 1.67% over just a few months. If you want to be invested in copper buy find Anto too expensive at these prices, KAZ is your best bet, as the downside is protected by the bid, as I said in my earlier posts.
Rastuss, you are back, all doom and gloom. Always good to have some pour cold water over my optimism for this share. I do disagree with you though. They can issue all sorts of negative forecasts, yes, but the facts will speak for themselves, just like yesterday's results. It is quite well known in the market that KAZ consistently understate its guidance and always have been. Did you not notice how they always manage to beat their guidance or at worst come near the top of the guided range? We all praise the management for "job well done", but this would be impossible to do so consistently if you were not understating guidance to begin with. On occasion they were even forced to increase the guidance part through the year. I am sure they would do 300kt this year, no doubt whatsoever, even from existing operations. And if you looked at the company's presentation yesterday and read more detailed description of the progress on Aktogay II, you would notice that all the main production units are complete now, just a few bits and bobs left to install. The concentrator has been electrified. It sounds like they will be starting dry commissioning any day now, probably March-April. I bet you they already started mining ore for Aktogay II, at least a few months ago. I will not at all be surprised if they commission Aktogay II by mid-year or end of summer at the latest. I'm willing to bet they will produce 5-10kt from Aktogay 2 this year, and that's not in their guidance. There is very little doubt in my mind that KAZ will produce less than 300kt of copper this year, and quite likely 310kt.
And you are wrong about selective mining, Rastuss. It is possible to do it, to some degree, but very difficult, particularly in the early years of the open pit, when grades are quite often higher due to supergene enrichment, which is evident at both Aktogay and Bozshakol. If you follow production announcements (and compare them with guidance) since operations began at the two mines, you will see a common theme, something along the lines of "production has been higher due to grades being higher than expected". Surely they knew the grades will be higher as they are obviously mining a supergene layer. We don't know how thick these zones are, but eventually they would move into lower grade main ore body, but it could be a few years before they can. These are huge open pits, they can't just strip one side to open up a lower grade layer. Plus these are massive disseminated sulphides, where grade is evenly distributed, so selective mining opportunities are rare. There are so many other reasons why they cannot or would not shoot themselves in the foot by doing something stupid like curtailing their production on purpose. The point it is, they can lie and cheat, but the facts will tell the truth.
Bakered, please read carefully. When I said 7-8x, I was referring to EV/Ebitda multiplier, not PE. In fact copper majors like Anto are trading at close to 9x EV/ebitda; even highly geared First Quantum is trading at 7x whilst KAZ is only at 5.8x. I prefer EV/ebitda over PE because the latter can vary significantly across peers and is more accounting-based (eg. GLEN reported a loss, so no PE). If we are talking PE, then I said 8.9x was very low, even compared to the fellow Kazakh copper minnow CAML which trades at 15x PE, not to mention the likes of ANTO (77x), FCX (93x), SCCO (38x), OZL (35x) or polish KGHM (44x) - you get my point...
I'm amazed how desperately they are trying to downplay these awesome results. The change in the tone of the report is so obvious. Gone is "lowers cost producer globally" replaced by very dry factual statement, completely disregarding that 64c/lb is THE lowest cost in the world, I'm sure of it. Note how they are trying to avoid uplifting words like "increased" or "beat" as much as possible - Mr. Southam choosing to say "saw the Group REPORT ebitda of $1.4bn". Come on, give yourself a praise like you did all those years, don't be shy!
And of course note how they decided not to pay the dividend - anything to try and push the price down. They didn't have to do it, the Nova's offer is post-dividend anyway (that is 780p less any dividend paid), so they could pay a dividend, nothing requires them not to - they chose to do it to create some negativity in their otherwise GREAT results with the sole purpose to try and push the price down. Despicable! The CEO and all the non-execs deserve to be fired! I know how I'll be voting at AGM