It’s the big day for Sirius Minerals - the EGM is kicking off. We aren’t allowed to take pictures but it is surprisingly quiet - perhaps a third of the seats full and an empty overflow marquee outside #SXX 
It’s been a long few weeks since Anglo American tabled it’s £405m bid - which is for 5.5p per share. The share price has gone a bit haywire over the last few days but is up today to around 4.5p. It’s very much seen as a knife-edge vote - we might not know until this afternoon
(We’ve just been warned that anyone behaving badly will get chucked out - this might just be normal EGM etiquette but has a bit more weight here, as there has been a lot of vitriol directed at bosses)
Here is today’s look ahead article: Sirius faces do-or-die investor vote over Anglo American takeover thisismoney.co.uk/money/markets/… via @MailOnline
As a reminder: Anglo needs 75pc or more to get the deal through. There are a few dozen voting shareholders in the room but the rest will have been registered by proxy last Friday.
Jesus - chairman Russel Scrimshaw said there have been threats of violence against the board and they’ve had to ramp up security here in case anything is carried out against staff. This is quite extraordinary for a company that spent years in the FTSE 250
And Scrimshaw has now apologised, says he is very sorry that things have come to this (Sirius will run out of cash by the end of this month). He’s now had to say that there has been no conspiracy with Anglo and that there was never an approach from the Qataris
Says that although the company is grateful for the support of retail shareholders - but claims they actually put forward little cash in some of the previous fundraisings. (There have been calls from the Fund Sirius campaign and others to tap private investors for cash)
And now Scrimshaw saying it is “entirely incorrect” that if Anglo will not be able to put in a higher offer if this bid goes through. Someone from the audience claiming this isn’t true as the board could allow this? (Technical legal heckling has been quashed for now)
They’ve searched the globe for the project - “the only likely alternative is administration or liquidation”. This means it is unlikely shareholders would get anything. Saying he knows some people have sold all but one of their shares so they may vote against it
Scrimshaw saying this could be doing damage to other shareholders - as well as the local economy. (Reminder: it was lauded as a project that would bring jobs, cash to Whitby/Scarborough and reap lots of money for UK economy for 50 years, as well as boost Teesside)
Also another technical reminder - there will be some votes here now but we might not know the vote until much later today
Question time!
(They have blue cards, press and guests have red ones)
Q1 - Sally Lines (spelling unsure) asking about the company taking down various videos from the internet that promoted the company and project back in 2015/16. Scrimshaw saying this was out of date material!
Sally says she doesn’t buy that this should’ve been taken down and wants them put back up. First time CEO Chris Fraser talking — says he’s happy to send them to people, clarifies they’ve been taken off YouTube channels not the website
Q2 - Gavin Palmer: former UKSA people. Says he’s bought shares so he can attend. Getting a bit heated here, Gavin saying RBS calls him the “chief complainer”. Chris Fraser: “Stick to the facts.” Ouch.
Gavin saying it seems there was “some pre-planning”. Says it’s up to the board... err I’m actually confused about what the question is here.
Gavin having a go at the board for approaching the Woodsmith Mine by raising money as they go rather than raise the money for it all in one go - which is what companies usually do (and admittedly hasn’t worked here). Gavin calls it a “catastrophe”.
Gavin: “it doesn’t find much to find examples of poor management”. He’s having a go at the company putting buildings up (?). Gavin now saying it’s disgraceful and shows their disdain and disrespect for holding the EGM here in London, compares it to BP in Aberdeen
Scrimshaw: “You’re making fine points with very narrow information”. G: “The facts speak for themselves.” S: “They don’t.” Turning into something of a filibuster. S says they have “total respect” for their retail shareholders.
Gavin’s question was whether the two executive directors should be removed - Scrimshaw says no, they are very capable people. Scrimshaw complimenting Fraser, says Fraser has got to a great place now but a project that fell at the last hurdle.
Now, I realise some of these tweets might be getting a bit tedious. But this exchange with Gavin is a microcosm of the investor vs board chat more generally, it’s a bit like being in a real-life version of the investor chat rooms that have proliferated with Sirius
While Gavin and Russell continue to tussle, it’s worth using this interlude to reflect on how much time and effort the company spent trying to get locals and ordinary investors on side. Sirius has generally put all its efforts into being accommodating.
No company plans to build a tunnel longer than the actual Channel Tunnel just for laughs - they did it to make sure they didn’t rough up the North York Moors
Gavin’s question is still going, Chris Fraser interjected to say, as the company has kept saying, that this was the only good proposal. Chris now having a go at Gavin for not being a long-term shareholder (he recently bought shares).
Chris saying it would have been transformational to get the support from the Government - this is the first reference so far to the company’s financing not being underwritten by the Govt at the last minute. This is the event that set Sirius on the path to the collapsed financing
Gavin saying he’s never met a board like this (Scrimshaw points out they haven’t really met before). Note: When Gavin finished speaking he got a round of applause from retail shareholders in the audience. This is the chasm between company/investors
Q3: A Swiss investor (didn’t catch name) saying Anglo should be offering 10p, he believes this is fair value. He says this would be fair for Yorkshire shareholders, he says they’re “tough as” and there’s no bullshit in Yorkshire. Asking for 5.5p in cash and 5p or 7p in stock
... so that shareholders who put their hard-earned pension money into the project will get what they deserve.
Another quick interlude: as a journalist tracking this story probably the most frustrating thing is not knowing how many private investors Sirius has. 85,000 was the amount in Dec 2018, they held around 50pc of stock. But that was A Long Time Ago
And follows major share price crashes - meaning many people may have sold out. We literally don’t know what influence ordinary investors have on this, which is just crazy (and shows that shareholder register rules could do with changing)
Chris Fraser’s response to the question is that they went back to Anglo and this was the offer, there’s no better one. Being asked if the co can just go back to Anglo and the Gvt one last time. Chris says no, “we have to make some calls now”.
CF: “We are here because this is the only offer on the table.”
Q4 - Yashmin Ismail, head of the Fund Sirius campaign, asks about the point that Odey made about Anglo not making the proposal finale. Chris: says he doesn’t know it’s a question for Anglo.
To amend how I phrased a previous tweet: have to clarify I have no disdain for ordinary investors here and how much influence they have on the vote. What I mean is we generally speaking we have no clue how the institutional/private holdings are actually distributed
Private investors by and large are the ones who have expressed they are angry and intend to vote down the offer (as well as Odey). But observers and shareholders are literally stabbing in the dark here- we can’t tell if the vote can actually be swung either way.
Yashmin: Asking if Anglo could come back with a better offer. Chris saying nope, they can’t come back for a year under takeover rules. Chris saying this isn’t scaremongering - there is no point hypothesising here.
Q5: How soon would you go into administration? Scrimshaw: Certainly by the end of the month. Says there is no pre-pack administration deal agreed but there have been discussions in case it gets to that point. CF: spoken to various administrators
Q6: Shareholder saying it’s an absolute disgrace for an Oppenheimer-founded South African company to be offering this price. “You have not really tried as much as you could,” he tells the board. Says his MP has said that Boris might look on this in a favourable way
Scrimshaw says they’ve already spoken to Boris - “what we have on the table today comes after all those discussions”. Chris Fraser - says he agrees with all points about why the Gvt should have supported the project.
(And to clarify previous tweet: the administrators would be likely called in if the deal isn’t voted through.)
ChrisFraser says this was a poster child project that the Government should have supported if it wanted to back the North. This is an excellent point - imo the fact the Gvt didn’t support Sirius or find a compromise way shows the Northern Powerhouse is a v weak concept
Question 6 shareholder says he won’t vote for the deal, gets a round of applause.
Q7: Asking if there was a way for Anglo to give an extra bond or way for Anglo to give investors an ongoing stake in the Woodsmith Mine. Scrimshaw - says, again, this is the only offer. Chris Fraser - says all these points are valid points.
This is where investors really seem to feel like they’re being disrespected. Fraser said board’s preferred outcome would be for Anglo to be a strategic partner. Says he totally accepts this is not a good deal - but with Coronavirus it would be even harder to raise cash now
Oh and sorry the point about this is where shareholders really seem to be being disrespected is my point - not something Fraser said. Imo that seems to be the real sticking point for a lot of people, that they will have no future stake in the project they’ve helped until now
Q8: Can the company close for a year? (Also a good moment to say I’m paraphrasing some of these points.) Scrimshaw: nope, we’d need to go into administration.
Q9: says he will vote for the deal. (No round of applause..) Q10: (God I hope I’ve not missed some questions). Shareholder saying it seems like they need a massive response from national press about necessity to invest in the North. Press and politicians could have strong bearing
Q11: another about options available, CF: there aren’t other viable pathways. Nothing else executable, all we have is this proposal from Anglo. As much as everybody at this table agrees the project is worth a lot more the share market was saying it was worth 3p pre-offer
Fraser saying he will stay on for another year - it’s key for the company to keep continuity of directors. This was what Anglo was clear about.
Q12: why didn’t you negotiate for us to get a stock offer for shares in Anglo? CF: this is the offer, Robert Goodwill, the local MP, tried to lobby for that type of offer (as the Mail reported).
Q13: The RNS on 6th August cancelling senior bonds.. did cause sp to collapse by 33pc and company didn’t give any more information 42 days. Says we didn’t need that much more info but this really damaged sentiment. Says there was a lot of brinksmanship
Question is: can you explain lack of support for sentiment and share price over the few months between August and Jan. CF: need a clear and concise information flow to shareholders. Says during that period of time there was lots of work being done in that time
But he adds that you can’t just update people all the time. During that period we also negotiated with Gvt lots, but they said no. Said it would have been misleading to constantly say we’re doing this, we’re doing that. (I.e. CF saying they didn’t want to confuse people)
CF: we acknowledge this is not a good outcome for shareholders, but it’s the one we’ve got. He says you couldn’t tell people ahead of an equity raise because it would hit the share price (which is a fair point imo)
Shareholder saying it doesn’t look good for this 42 day window, though, even without breaking regulations.
Someone has tweeted me to say that I should ask about what Polygon is doing (a previous short seller that has built up a more than 10pc positio lately), which is a good point but journalists can’t ask questions unfortunately.
Gavin asking another question - did any public bank like Barclays back this project? CF: if you read our documents over the years you’ll have seen there were a series of banks engaged who undertook due dil, but it was based on Gvt IPA being on board.
(IPA is the Infrastructure and Projects Authority)
Q15(I think): is it inevitable company will go into admin if it doesn’t go through? Scrimshaw - says this is what is most likely to happen.
Yashmin asking another q - people have committed to funding via Fund Sirius, says we would certainly support you, we expect dilution but with the uplift when we hit polyhalite, “anything’s possible” to get a lifeline now - we’re very willing to support you.
Says there is appetite - even if we could raise £200m to get us through the next year. Round of applause. Scrimshaw thanks her for her passion, but says in the past when gone back to the market for cash it has not had very much take up from retail shareholders
