Investors desperate to keep potash miner Sirius Minerals (SXX) independent and avoid a takeover by Anglo American (AAL) were finally dashed by the company today.
According to reports, a group of shareholders had launched a last-minute bid to find an alternative to the £405m takeover deal by trying to drum up interest from fellow private investors and institutional backers in other financing options, such as a fundraising from selling new shares.
That way the company could retain its independence and London listing and would save many long-standing shareholders from being forced to crystallise losses on their investment in the company.
The share price of Sirius Minerals collapsed six months ago when it admitted it was struggling to raise money to fund the build of its Woodsmith potash mine in Yorkshire.
SIRIUS UNABLE TO SECURE ANCHOR INVESTOR
In an update released just before midday today, Sirius said that the alternative option pitched was not 'viable'.
The back-up plan would have relied on Sirius being able to raise an extra $680m in debt financing for the the project. That would have been a precursor to additional $2.5bn of extra cash needed to get the project up to capacity production of 10m metric tonnes of potash per annum by 2024.
This plan would have needed an anchor investors to underwrite much of the new funding, plus concessions from some of the company's major creditors.
‘HIGH PROBABILITY OF LIQUIDATION IF DEAL NOT APPROVED’
‘The board confirms that the company has not been able to secure an institutional anchor investor willing to provide sufficient support for the alternative proposal which was part of the consortium’s requirements,’ said Sirius,
‘Without an institutional anchor investor providing the majority of the equity required, the consortium of financial investors have informed the board that they do not consider the alternative proposal to be viable and have therefore ceased discussions with the company.’
The firm again warned that if shareholders don’t approve the Anglo American acquisition, ‘there is a high probability that the Sirius board will be forced to place the business into administration or even liquidation.’
Shareholders will vote on the 5.5p per share Anglo American buyout on 3 March.