On 07th February 2020, Sirius Minerals Plc (LON: SXX) requested the shareholders to accept a takeover bid from Anglo American Plc, or otherwise it could get insolvent. However, around 80,000 retail shareholders of the company are concerned as now they are faced with a massive loss from the takeover bid of just 5.5 pence a share when the shares of the company once reached a peak at 44 pence apiece.
Sirius Minerals Plc stated that “there is no other option and there is a higher chance that the company will go into administration if the shareholders don’t accept the terms of the acquisition.” That’s why Sirius Minerals Plc, which is building a large fertiliser mine at North York Moors, has urged investors to support a £524 million rescue attempt from Anglo American Plc.
Russell Scrimshaw, the Chairman at Sirius Minerals Plc, stated that backing a sale to Anglo American Plc was one of the best ways to generate some value for shareholders as well as rescue the project. This project is considered as the most significant project for mining in the United Kingdom for a generation and for the betterment of the North Yorkshire area.
The previous week, Jupiter Asset Management, which is one of the company’s largest investors, called on management to initiate other options or an alternative for a rescue package to finance the project which is undergoing development at a cost of $5 billion.
As per media report, the company stated that it had looked at raising $0.6 billion through the issuance of equity to fund the further stage of the project’s development only to conclude that there would be “inadequate appetite to conclude such a transaction.”
Since 20th January 2020, when the company received the offer from Anglo American Plc, the Board of Sirius Minerals Plc and its advisors were continuously searching for options jointly to implement the substitute bid. But no progress has been made which has resulted in the conclusion that substitute bid is not actionable.
The company also informed that its advisers, which include Lazard and JPMorgan, are set to charge £5.2 million as fees from the transaction and that Anglo American Plc first emerged as a potential strategic investor in the fourth quarter of the year 2018. However, Anglo American Plc “refused the chance to become a strategic investor” in the last month of the year 2018. Additionally, they exposed that, an Anglo American non-executive director, Ian Ashby, purchased more than 1 million Sirius Minerals Plc shares between April and September in the year 2019. He then sold off the stock at a loss when the company initiated a comprehensive review in September 2019.
Sirius Minerals Plc has established an investor’s helpline for its retail investors who have purchased into the project because lots of investors are the first-time stock buyers who are unaware with takeover regulations and rules. However, in January 2020 Anglo American Plc suggested a takeover bid to the Board of Sirius Minerals Plc. The price had valued the distressed company at just £0.4 billion.
Overview of Sirius Minerals Plc
Sirius Minerals Plc (LON: SXX) focusses on bringing massive volumes of POLY4 to the international agricultural sector. The company has trademarked the name POLY4 for its excellent multi-nutrient fertiliser. The POLY4 is produced from the top grade and world’s most significant polyhalite deposit, which is situated in North Yorkshire, United Kingdom. The POLY4 can be used to boost balanced fertilisation globally. Sirius Minerals Plc has a listing at the London Stock Exchange. Its shares are also listed through a sponsored ADR facility in the United States on the OTCQX.
SXX - Financial Highlights
On 17th September 2019, the company announced its half-year performance for the period ended 30th June 2019.
The company's operating costs increased to £13.0 million in the first half of the year 2019 as compared to the £10.8 million in the first half of the year 2018. In contrast, the operating loss increased to £14.3 million in the first half of the year 2019 as compared to the loss of £10.8 million in the first half of the year 2018.
The Net finance income/ (expense) increased to £11.2 million in the first half of the year 2019 as compared to expense of (£85.5) million in the first half of the year 2018. The (loss) for the period declined to (£3.1) million in the first half of the year 2019 as compared to loss of (£95.3) million in the first half of the year 2018.
The cash flow hedging movement increased to £7.1 million in the first half of the year 2019 as compared to a loss of £0.7 million in the first half of the year 2018. In contrast, the total comprehensive income/(loss) for the period attributable to the owners of the company increased to £4.0 million in the first half of the year 2019 as compared to a loss of (£96.0) million in the first half of the year 2018.
The basic loss per share declined to 0.06 pence in the first half of the year 2019 as compared to loss of 2.10 pence in the first half of the year 2018. The diluted loss per share declined to 0.47 pence in the first half of the year 2019 as compared to the loss of 2.10 pence in the first half of the year 2018.
The total non-current assets increased to £994.4 million as at 30th June 2019 as compared to the £762.9 million as at 31st December 2018. The total current assets increased to £698.9 million as at 30th June 2019 as compared to the £267.5 million as at 31st December 2018. The total non-current liabilities increased to £237.0 million as at 30th June 2019 as compared to the £213.6 million as at 31st December 2018. The total current liabilities increased to £563.2 million as at 30th June 2019 as compared to £242.2 million as at 31st December 2018.
SXX – Stock Price Performance
On 10th February 2020, at around 09:18 AM (GMT), at the time of writing this report, the stock of Sirius Minerals Plc was trading at a price of GBX 5.50 per share on the London Stock Exchange, a decrease in the value of around 0.54 per cent or GBX 0.03 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 5.53 per share.
At the time of writing, the market capitalisation of Sirius Minerals Plc was £388.22 million with regards to the current market price of the stock. The free float and outstanding share of Sirius Minerals Plc were reported at 6.25 billion and 7.02 billion, respectively.
The share price of Sirius Minerals Plc recorded at GBX 26.84 as on 09th April 2019 was its 1-year peak price, whereas the share price recorded at GBX 2.10 as on 17th September 2019 was the 1-year low share price. The current share price was lower by 79.50 per cent from the 1-year high price; whereas the current share price was higher by 162 per cent from the 1-year low price.
The beta of the stock has been reported at a value of 1.61, representing the fact that the movement of the share price of the company is of higher volatility compared with the movement in the comparative benchmark index.