PYX Resources: Achieving volume and diversification milestones. Watch the video here.
EthioEthio. I don't agree. The company cannot just sit on flanks or Tipil approvals without announcing such price-sensitive information to the market. This is the case whether there is an offer period or not. My guess is that approvals have been granted informally, but the board is waiting for signed confirmation before issuing RNSs. There can be no other explanation.
Apologies for the delay in responding. There is so much rubbish posted on this board (including predictions of a £3.50 takeout price) that I don't check it very often. My own estimate of a sale price is in the range 35-50p.
Tommyscope. If the EUA board deemed the highest bid in a BAFO process to be unacceptable, then the process would in my view be called off and the company would come out of the offer period. The share price would fall as short-term speculators bale out because they don't want to (or can't) wait for the long-term value seen by the board. I see this scenario as possible but unlikely given the strategic value of the assets and the fact that the board has to demonstrate its desire to sell the company to persuade the Takeover Panel to agree, exceptionally, to a Formal Sale Process.
AJsWheels. The Takeover Panel does not like offer periods that go on for ever. UBS will also want to get their fee and move on. The uncertainty is flanks approval, which the board are obliged to announce by RNS whether there is an offer or not, to avoid a false market (ie they can't just save the flanks announcement for the offer RNS). The board is also obliged to provide shareholders with occasional updates on the Formal Sale Process. So I think we will see an update soon, and a recommended offer by the end of next month. That's my guess anyway.
Of course anyone who is not tied up with an NDA can buy in the market. And some wealthy individuals will be playing the game, as we have seen with the holdings RNSs. But my point is that the big funds don't generally get involved in bid situations. It is a classic PI conceit that the big institutions follow where the PIs lead.
Just to address some misleading posts on the form of any offer.
UBS are running a formal sale process and will probably, as I have said earlier, required interested parties to commit not to buy shares in the open market, to maintain a level playing field. So bidders are unlikely to be buying. Ditto the big institutional investors and pension funds, who don't normally take punts on takeover plays at this late stage.
In return for not being able to buy in the market, bidders will probably have been promised that the BAFO (best and final offer) will get the irrevocable support of the directors and key institutional shareholders, thus pre-empting any rival bids. So there will not be a bidding war at that stage. This will all be sown up when we get the recommended offer RNS, which will not call an EGM as the offer document will be posted to shareholders who need to decide whether to accept. But directors and institutions will, as I say, already have accepted, so it will be a done deal. That's generally how these processes work.
The directors and biggest institutional investors will have to commit to vote their shares in support of any agreed offer, so rival bids are very unlikely. They usually only arise when there is an unsolicited (hostile) offer, which is very unlikely here.
Alfe, I doubt they are spending much time on the deal. Ian Hart maybe, given his mining focus. It is commonplace to put marquee names on the RNS, but the grunt work will be done by more junior bankers.
...where we are (ran out of characters).
I'd be glad to be proved wrong about 35p.
There seems to be a lot of confusion on this board about how the FSP mechanics actually work and when an RNS might come. I used to work in M&A, including public takeovers, so have some idea of the likely scenario.
UBS are running a sale process. My guess is that to participate in the process bidders will have had to sign an NDA and commit not to buy in the open market. This is to maintain a level playing field between bidders. So speculation about bidders buying up shares in the market is wrong-headed. This can't happen. A bidder that is not participating in the FSP could buy shares, but it won't be privy to any due diligence, so again it is unlikely.
UBS will probably be running a BAFO process (Best And Final Offer) to a fairly tight timetable, with a fixed deadline. There is no obligation to announce individual bids as they come in, simply the winning bid, assuming it is recommended by the EUA board (in which case the directors will have to commit their own shares to support the bid). An EGM will only be required if the offer is for assets (say MT) rather than for the whole company. If the takeover is for the whole company then shareholders will receive an offer document setting out the terms of the offer and how they can indicate their acceptance (or not). Again this process runs to a set timetable under the Takeover Code. If the offer comes from another listed company, then it could include shares as part or full consideration, or as an alternative to a cash offer, although then the offer price could fluctuate as the offeror's share price fluctuates. The advantage of taking shares is that you can defer some or all of any capital gains liability that may be due.
With the shares now trading, and possibly settling around the 20p mark before any further announcements re flanks etc, bidders will be mindful of the standard takeover premium (ie the premium for acquiring control), which is around 30-40%. Premia in excess of this are very rare. So absent any further news, bidders will be looking at a takeout at between 26p to 28p. My guess is that board will be looking to make various positive announcements during the sale process that will drive the share price northwards, thus resetting the baseline against which a market premium is calculated. Talk of an exit at between 70p and £1 is, in my view, fanciful. This is the full value of the company to a bidder, with total control (which we as individual shareholders do not have), and some value needs to be left on the table to make the deal work for a bidder. Which is why I stand by my earlier 35p exit valuation.
If the offer is for MT only, then an EGM will be required and presumably the bulk of the sale proceeds will be returned to shareholders via a special dividend. The advantage is that we keep our shares in EUA and can continue to participate in any further upside; the disadvantage is that the tax treatment of dividends is worse than it is for capital gains.
That's my take on wher
In answer to your various questions:
djm1 - I think a lot of the numbers mentioned on this board are fanciful. This is still a risky play and we are talking about Russia after all. The ACF valuation of 55-60p max was predicated on a Pd price of $2,295/oz, since when the price has fallen to a spot price of $1,977/oz and the world economy (and therefore Pd demand) has got a lot riskier because of COVID-19. Very simplistically, if we just pro rate for the change in Pd price and apply a further discount for market uncertainty, we get to a control valuation in my view of about 35p, which I think would be a great outcome for shareholders given where we started.
G-Man11 - there is no obligation to come out of suspension if the BOD and the Nomad reasonably think there is a continued risk of a disorderly market, which with so many shorters around must be a realistic prospect. The only way to avoid a disorderly market is to anchor the share price with a firm takeover offer, which the BOD and UBS are now working on delivering for shareholders. The Takeover Panel will keep pressure on the company to run an expeditious process, weeks not months, so the 'later part of 2020' stuff is just guff.
GeckoLovesGreed - you are correct that another advantage of suspension is that it prevents an unsolicited bidder accumulating a stake in the market. The BOD can control the sale process better.
Erixlie - the majority of companies going into an Offer Period do deliver a deal in the end. The risk factors in our case are general market uncertainty, the Russia factor (and the obvious Russian buyer Norilsk may be hamstrung by its regulatory/environmental troubles) and the BOD's own view about intrinsic value vs bidders' views. NB the Takeover Code says nothing about suspension. The FSP begins when the Takeover Panel permits the offeree company to solicit confidential bids without having to disclose bidder identities to the market.
Great news from the company this morning, but as someone who used to write Takeover Code compliant announcements when I worked for a City investment bank, I am quite disappointed with UBS's handiwork this morning. We clearly have a pretty junior team on the account.
What for example, is an 'inbound expression of interest'? What expression of interest from a potential purchaser is not 'inbound'? I suppose this could mean there are no plans for a management buy-out. The formatting of the RNS is also all over the place, the hyperlink doesn't work and 'position' is misspelled in the section under Disclosure Requirements. In my day we would have a junior analyst 'cold-towel' the draft RNS for these kinds of mistakes.
For those who don't know, a Formal Sale Period (FSP) is not actually defined in the Takeover Code, but was a new mechanism introduced in 2011 whereby companies looking to sell up could put themselves into an offer period without informing the market of the identity of the potential buyer or buyers. Hence all the Takeover Panel exemptions about identifying bidders, the usual 28-day 'put up or shut up' rules and break fees.
More details at https://www.charlesrussellspeechlys.com/en/news-and-insights/insights/corporate/2016/takeover-code-formal-sale-processes/.
As others have noted, this all points to a sale of the whole company rather than a sale of just the MT project. I hope there is a loan notes or share alternative, because I am not in an ISA so will get a massive CGT bill if we get the kind of value I am expecting. My contribution to Boris's 'Rooseveltian' reconstruction plans I suppose, so it's for the greater good.
ManFromUruguay: clearly if the sale is 'in the bag' then the SP will not fall. But if negotiations are protracted and we are still in 'there can be no certainty' territory, then the SP probably will fall, given the high number of speculative investors looking for a quick gain who haven't really researched the company. NB I have been invested for over 15 years!
Lancashire_Lad: the relationship between the company and its potential nomad is entirely within their control, not AIM's. So both can string out the 'due diligence' to suit their ends.
I am not fretting, and here is why. I write as a former City investment banker, so I do have a feel for how these these things pan out.
* The underlying value of this company is clear, as various broker's notes have detailed. The demand for palladium and the weakness of the rouble make this a compelling asset, notwithstanding the obvious country risk (which is why a Russian buyer remains the likeliest outcome).
* The shares were suspended in February because there was a risk of a false market following the rogue tweet and the AIM rules required such a suspension.
* At about the same time it became clear that the June 2018 loan agreement with Dmitry Suschov should have been notified to (but not voted on by) shareholders under Aim Rule 13. This relatively minor c*ck-up falls upon the shoulders of the nomad WH Ireland, who have lost interest in AIM clients anyway, so a mutual but amicable separation is agreed, including a reasonable notice period . We have already heard from the company that this is a 'separate' issue from the share suspension.
* So a new nomad is required and we are told is close to being signed up. But the company does not have to end the suspension until the nomad does sign up, which needs to be by the end of this month.
* So given the need to confirm formally the MT flanks approval (which we are also told is in the bag) and the substantive transaction, whatever it is (sale of MT followed by special dividend or sale of the whole company, probably the former given the company tweets about WK), the board quite rightly hides behind the nomad appointment to prolong the suspension as long as possible. Because to return to the market before these things are in place could lead to a short-term fall in the share price, notwithstanding the underlying asset value.
This is my take, and why I am fairly confident that we will hear positive news from the company, but possibly not until the very last moment.
This is technically possible, I guess, but only if approved by shareholders as it would be a substantive transaction. The board is obliged to act in the interests of all shareholders, so I would say that this scenario is pretty far-fetched. Shareholders are only usually shafted by debt holders, not other equity holders.
People should relax about the NOMAD. The language about delisting if no NOMAD is appointed is standard ar*e-covering as required by the AIM rules (see for example the Mobile Streams announcement about its NOMAD resignation on 28 October 2019, since when the share price has almost doubled).
There are also loads of other NOMADs focusing on the extractive industries. Indeed, WH Ireland aren't even the main player in this space. and as noted they are in trouble themselves. I'd expect the new NOMAD to be one of these (numbers in brackets are number of NOMAD appointments in the industrial and precious metals mining sectors):
SP Angel Corporate Finance (27)
Beaumont Cornish (14)
Strand Hanson (12)
WH Ireland (8)
Numis Securities (7)
Allenby Capital (6)
Grant Thornton (6)
Will offset to some extent for EUA the fall in the Pd price.
https://www.bloomberg.com/news/articles/2020-03-18/ruble-s-plunge-has-traders-weighing-bank-of-russia-s-options
I don't often post here as there is so much silliness on this board, but I do hold over 2.5m shares, sadly not in an ISA as I didn't see the share price rise coming and was sitting on losses anyway, having first invested over 15 years ago in the days of Andrew Counsell and Michael Martineau. Now sitting on a handsome (paper) gain, and some real gains (top-sliced 1.7m shares before the suspension, albeit at an average 2.6p) so HMRC will also be a winner.
But I think we need to be realistic here. The looming recession and the collapse in the Palladium price mean that the BOD will be doing extremely well to get any deal over the line. We must hope that they do. But a reminder that when First Equity did their valuation back in December, when the Pd price was higher than today but much lower than the peak (US$1,760 per/oz), they only came up with a price of 12.75p. On the upside that included only a very heavily discounted value for the flanks, so approval might change that, and of course it was a price per share in the open market, ie it did not include a control premium, which might point to something nearer 15p a share if the whole company is sold. I'd prefer a more limited deal which sees the company continue, so that I can smoothe out capital gains.
But I think the conclusion is that ANY premium to the 7.2p price at suspension would be a major achievement, and we should be glad for it.
Very happy to be shot down for my realism, but only with reasoned argument, not abuse!