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While it was a very pleasant surprise to see the RNS this morning and it is undoubtedly good news for the company, it is even better news for the UK, as the expansion of testing is a key part of the strategy to defeat this pandemic.

Some frankly laughable numbers bandied around on here today, but the most important thing to my mind is that this will inject cashflow into the business at a time when liquidity is king, so this news both de-risks the core business and adds to the overall revenue numbers (and bottom line), which is a rare thing in the current market.

The fundamentals are exceptional here and today's news expands the product range, while protecting against any bumps in the road from the impacts of Coronavirus. I'm looking forward to the next trading update in April.

Re-posting an extract of a post I made over the weekend, as I think talk of a vote in two weeks is wrong. Happy to be corrected.

As I understand it, the proposed takeover is being progressed as a Scheme of Arrangement, which has slightly different criteria to a contractual takeover offer, but which still follows a similar timetable. That key aspects of the timetable from our perspective are that:

- The Scheme Document needs to be published within 28 days of the announcement of the firm offer (i.e. by 17th February)
- Once the Scheme Document has been published, there must be a minimum of 21 days before the Court Hearing and the General Meeting (at which shareholder votes take place).
- The Court then has to sanction the scheme before it becomes effective (the 'Effective date') which could take a further two to three weeks.
- The acquiring company must then settle (pay the monies) within 14 days of the Effective Date.

The above is consistent with the company saying that it expects the scheme to become effective by the end of March. So this means that the vote is still somewhere between three and five weeks away, depending on when the Scheme Document is issued. Clearly, AAL will probably want to issue the Scheme Document as soon as they can, because it narrows the overall window available for any counter-offer.

Another thing to note: The BOD have NOT sold their shares or agreed to sell their shares - they have given an irrevocable undertaking that they will vote in favour of the Scheme at the Court Hearing and Special Meeting. 'Irrevocable' suggests that they are committed to do this regardless of what else may happen (e.g. a better offer), but given that their holdings only represent 2.5% of the company, it's unlikely to be material in terms of the final outcome. It clearly appears, however, to be an endorsement of the AAL deal, although that deal could obviously be adjusted in the light of an alternative offer (so conceivably they could still meet this obligation by voting for a better AAL deal).

As I understand it, the proposed takeover is being progressed as a Scheme of Arrangement, which has slightly different criteria to a contractual takeover offer, but which still follows a similar timetable. That key aspects of the timetable from our perspective are that:

- The Scheme Document needs to be published within 28 days of the announcement of the firm offer (i.e. by 17th February)
- Once the Scheme Document has been published, there must be a minimum of 21 days before the Court Hearing and the General Meeting (at which shareholder votes take place).
- The Court then has to sanction the scheme before it becomes effective (the 'Effective date') which could take a further two to three weeks.
- The acquiring company must then settle (pay the monies) within 14 days of the Effective Date.

The above is consistent with the company saying that it expects the scheme to become effective by the end of March. So this means that the vote is still somewhere between three and five weeks away, depending on when the Scheme Document is issued. Clearly, AAL will probably want to issue the Scheme Document as soon as they can, because it narrows the overall window available for any counter-offer.

I'm not sure what advantage would be gained by another interested party (if any remain) delaying any counter-offer that they were thinking of making, other than that they may need time to work it through, but clearly once the Scheme Document is issued, the clock is really ticking. I'm also not sure whether we should read anything into this being a Scheme of Arrangement rather than a takeover offer - I'm no expert, but it seems to imply a greater sense of collaboration between Sirius and AA, but it may also be preferable to AA in terms of the voting thresholds required.

Another thing to note: The BOD have NOT sold their shares or agreed to sell their shares - they have given an irrevocable undertaking that they will vote in favour of the Scheme at the Court Hearing and Special Meeting. 'Irrevocable' suggests that they are committed to do this regardless of what else may happen (e.g. a better offer), but given that their holdings only represent 2.5% of the company, it's unlikely to be material in terms of the final outcome. It clearly appears, however, to be an endorsement of the AAL deal, although that deal could obviously be adjusted in the light of an alternative offer (so conceivably they could still meet this obligation by voting for a better AAL deal).

One other thought is on why CF has been so silent throughout all of this. Several reasons for this have been amply explored on here, but one which hasn't been put forward is that, for whatever reason, CF needs to distance himself as much as he can from the AAL deal. That would allow him, for example, to be a better advocate for an alternative if that does become available at some point, as he hasn't publicly fronted the AAL deal. I can't put any substance behind this - it's just a thought.

Achille / Yash88,

Thank you for reaching out, but I'm afraid that, while I completely understand the reasoning of all those involved in initiating this action, I don't feel able to contribute at the moment. This is for two reasons:

Firstly, my view is that such action is premature until we have a clear and definitive way forward from the BOD. Until the BOD communicates anything to the contrary, I believe that the strategic review continues to be ongoing and there are therefore a broad range of possible outcomes for both the project and my investment.

Secondly, on the basis of the above, I continue to hold and therefore haven't personally made a loss at this point. Indeed, in the scenario of a takeover on the terms outlined to date by AA and the Company, I would actually make a marginal profit on my current holding, albeit one that represents a paltry reward given the opportunity cost of what I could have achieved for significantly less risk elsewhere over the time that I've been invested.

So, I don't see that I could reasonably argue that I am going to (or may even be likely to) incur a loss based on anything other than pessimistic speculation about a possible outcome which has no firm basis in fact at this point. Don't get me wrong, I believe that the Company needs to provide a full update on the strategic review ahead of us making any decision about any offer and I am completely against the Company being sold for 5.5p per share, as I believe that such an outcome would be utterly unjust for long term shareholders, given the risk that we have taken to get to where we are. However, I can't actually claim that I have lost any money at this point ahead of knowing what the final outcome is and I also can't say that I feel particularly misled by the Company, based on the (admittedly limited) facts we currently have. That's not to say that the communication couldn't have been considerably better, but I'm not sure how much more they can say in the current situation until they have something else concrete to disclose.

I hope you understand and will watch your progress with interest, while continuing to consider my own position as the situation develops. If my stance alters, I will of course let you know.

1. When asked about what access they had been given to conduct their DD (about 18 minutes in), the response was "We have had really good co-operation from the Sirius team and have had what I call appropriate access for an external party coming in to look at their information. And you’ll be aware from their own announcements that they were running a little bit of a process to look for a strategic partner, so we’ve had good access, but it wouldn’t be appropriate for me to comment further today."

Difficult to tell from this whether their bid has come out of the strategic review, but something about the tone of the response suggested to me that it may not have done i.e. their DD has run in parallel, but it was helpful that information was being made available for participants in the strategic review anyway. Interesting also that he said "were running" (rather than "are running"). That could mean that the process has ended, but on balance from the way it was said I think it just meant that when they were doing the DD, that process was also happening.

2. This huge $27Bn global mining company has been all over the revised development plan and has broadly endorsed it - i.e. the revised plan is the way that they intend to develop the project if they acquire it and the numbers look about right to them. That is a massive endorsement of the plan - the whole point of any interested parties undertaking due diligence is to confirm that what's is being presented is technically viable and that the numbers stack up - and that's just what they've done.

So, we've just been told by a highly credible independent business that they have reviewed the Company's plans and signed off on their DD (and also, by the way, suggested that the shaft sinking risks aren't really a worry to them). Why, therefore, should we have any reason to believe that the other interested parties who were involved in the Strategic Review won't have reached the same conclusion?

There has been a huge amount of gnashing and wailing on here for the last two days, but based on what the Company has actually told us (and putting to one side what we might reasonably think they should have told us), the only facts that we know for certain are that the review remains ongoing (because we haven't been told otherwise) and that we've had an approach about a possible takeover offer at 5.5p. And we also now know that the potential bidder thinks that the revised project plans look pretty robust, so we may get a firm offer by 5th Feb, after which we will have at least a further month to have a vote and decide if we're going to accept the offer.

To me, the risks haven't really changed unless we are definitively told what the outcome of the review is and that there are no other interested parties in the mix. I guess it's possible that the Company doesn't want to say that, as it would undermine our position, but until we hear one way or the other, it's impossible to call.

There is something very strange about the way that this has been announced today. There has been no statement or comment from the CEO or Chairman and absolutely no reference to the Strategic Review, which the market has been expecting an update on. No more fanfare than a holdings RNS for what ostensibly represents one of the most significant developments in the Company's history.

If the BOD genuinely think this is the only option left for us, wouldn't they be saying "we've tried every other avenue and believe this is genuinely in the best interests of shareholders" and "we will seek to secure the best possible outcome for all stakeholders in this world class project" etc. But they haven't said a word - Anglo American have said quite a lot, but the Sirius Board have simply issued a statutory notice and said nothing else.

I've been thinking about this all day and can only come up with two reasons for it:

1. It is what it is - the revised financing discussions have not yielded any viable options and the Company fully intended to update the market imminently, but were overtaken by events - perhaps a leak, or maybe the SP was getting too hot during the day yesterday (before the final spike - it's been bubbling up all week) and that was going to put the offer at risk, so they hurriedly lodged the RNS (prompting the final spike yesterday), and then all of the detail around the outcome of the strategic review etc. will follow in the coming days.

2. The strategic review is continuing as planned and this is one of a number of options, none of which have been finalised. If that was the case, perhaps they can't say anything about where the review has got to at this stage, but they have to make the announcement now because, either:

A. They have reached the point in the DD process with Anglo American where the terms of a takeover offer have been communicated to the BOD. In that circumstance, my understanding is that they would have to notify the market (even though it's within the context of a strategic review).

and / or

B. Of all the possible outcomes from the strategic review, a takeover has the longest timelines to complete (there are fixed timescales for each stage of a takeover), so working back from the end of March, they have to announce this now, to give shareholders adequate notice of the offer and to allow for the issue of circulars and voting etc. during February and March. It would seem sensible to me that such matters were not left until the company ran out of money, as we'd be (even more) over a barrel at that point. There being nothing else on the table for the BOD to consider as a viable alternative at this point, they would clearly have to indicate that they would be likely to recommend any formal offer, as to do otherwise would kill a viable way forward (and one which places pressure on any others still involved in the review process).

I have no idea which it is, but it does seem a very odd way to communicate th

There is something very strange about the way that this has been announced today. There has been no statement or comment from the CEO or Chairman and absolutely no reference to the Strategic Review, which the market has been expecting an update on. No more fanfare than a holdings RNS for what ostensibly represents one of the most significant developments in the Company's history.

If the BOD genuinely think this is the only option left for us, wouldn't they be saying "we've tried every other avenue and believe this is genuinely in the best interests of shareholders" and "we will seek to secure the best possible outcome for all stakeholders in this world class project" etc. But they haven't said a word - Anglo American have said quite a lot, but the Sirius Board have simply issued a statutory notice and said nothing else.

I've been thinking about this all day and can only come up with two reasons for it:

1. It is what it is - the revised financing discussions have not yielded any viable options and the Company fully intended to update the market imminently, but were overtaken by events - perhaps a leak, or maybe the SP was getting too hot during the day yesterday (before the final spike - it's been bubbling up all week) and that was going to put the offer at risk, so they hurriedly lodged the RNS (prompting the final spike yesterday), and then all of the detail around the outcome of the strategic review etc. will follow in the coming days.

2. The strategic review is continuing as planned and this is one of a number of options, none of which have been finalised. If that was the case, perhaps they can't say anything about where the review has got to at this stage, but they have to make the announcement now because, either:

1. They have reached the point in the DD process with Anglo American where the terms of a takeover offer have been communicated to the BOD. In that circumstance, my understanding is that they would have to notify the market (even though it's within the context of a strategic review).

and / or

2. Of all the possible outcomes from the strategic review, a takeover has the longest timelines to complete (there are fixed timescales for each stage of a takeover), so working back from the end of March, they have to announce this now, to give shareholders adequate notice of the offer and to allow for the issue of circulars and voting etc. during February and March. It would seem sensible to me that such matters were not left until the company ran out of money, as we'd be (even more) over a barrel at that point. There being nothing else on the table for the BOD to consider as a viable alternative at this point, they would clearly have to indicate that they would be likely to recommend any formal offer, as to do otherwise would kill a viable way forward (and one which places pressure on any others still involved in the review process).

I have no idea which of the above it is, but it does seem a very odd way to c

Just been the November Strategic Review Update. Slides 22 onwards set out the essence of what the revised approach will mean in terms of reducing the risks associated with the deferred scope and this often gets lost in the noise around what's going to happen with the initial ($600m) scope. A couple of recent posts have highlighted a number of these and they get referenced on here quite a lot as separate upside considerations, but I think it's really important that we see them as a collective, as the revised approach is a package that has two very definite sides to it:

1. We take some kind of equity hit on the initial scope.
2. That equity hit MASSIVELY reduces the risks (and therefore costs) of the deferred scope. Slides 24 and 25 highlight this very clearly:

Technical risk (lower)
- Reduces technical risk of shaft sinking by delivering Initial Scope prior to debt financing
- Further demonstrated progress provides option to incorporate upside opportunities

Commercial risk (lower)
- Reduced scope of risk sharing contracts as shaft sinking scope delivered
- Balance of scope predominantly fixed price
- No port leasing assumed in the underlying funding requirement

Time to cash flow (faster)
- Financing drawn at or around the time of first revenue
- Financing ramp-up increases operating cash flow contribution and reduces interest during construction

Quantum of debt (lower)
- Net capex of up to US$2.5bn
- Opportunity to include material operating cash flow during ramp up
- Potential to deliver fully funded financing plan

Credit metrics (robust)
- Previous stage 2 financing structure rated B/B
- Gearing level further reduced (debt:equity basis)
- Debt fully repaid within 3 years of commercial production

Other enhancements
- Strategic investor would provide traditional “Sponsor” halo to financing
- Contracted volumes substantially increased since prior project financing process (now 13.8 Mtpa at peak)

The presentation doesn't include any assessment of what the above adds up to in terms of likely reductions in the financing costs for the deferred scope (beyond the obvious impact of the quantum reduction in capital from $3.1Bn to $2.5Bn). By definition, reduced risks equals reduced financing costs, so once the funding for the initial scope is secured, we will be raising 20% less debt at significantly cheaper rates. There is also then the possibility that the Govt Guarantee might come back into play, as the risks of the deferred scope are essentially the same of any major infrastructure project.

We should therefore expect an update on the likely deferred scope financing costs as well as the initial scope arrangements when the RNS lands, plus an update on the construction cost saving options, some of which weren't included last time. So, while the headlines will no doubt determine the sp reaction on the day, there could be some real positives to look out for in the detail when the RNS comes.

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