Sirius shareholders face a stark choice - Ros Snowdon

The ShareSoc Sirius Shareholders Group (SSSG), which is supporting small investors in Sirius Minerals, said they now face a stark choice between accepting Anglo American’s “unpalatable” 5.5p per share offer or “the very high probability” of losing everything if they reject it.

Anglos 405m offer will bring some certainty to the 1,200 staff working on the project at the Wood Smith Mine near Whitby

Local shareholders have seen the Sirius share price sink from 45p in 2016 to close to 5.5p. Almost half of the company’s shares are held by 85,000 small investors, including 25,000 shareholders in Yorkshire and the North East. Around 10,000 investors live in the immediate region of the North Yorkshire mine.

SSSG said a rejection of the offer is likely to lead to a rapid transition into administration.

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Mark Northway, chairman of ShareSoc, said there is a remote possibility of a conventional offer by Anglo. By that he means an offer that would allow shareholders to retain an economic interest in the mining project.

He also said there is a remote possibility of a rescue financing by the Qatar Investment Authority or another interested party, but shareholders need to evaluate these outcomes against “the very high probability” that they will not arise.

Mr Northway said some shareholders have said they will allow their emotions to dictate their vote, preferring to risk everything rather than to accept what they see as an unfair outcome.

“ShareSoc’s clear view is that investment decisions should be made on objective, not emotional grounds,” he warned.

My view is the threat to vote against this deal looks like cutting off your nose to spite your face.

Mr Northway said the offer of 5.5p by Anglo is “undoubtedly opportunistic and takes advantage of the distressed financial position of Sirius”.

Yes, the price is at a premium to the market price in the period before the offer, but Mr Northway said it is at a significant discount to the intrinsic value of the mine.

He said ShareSoc has spoken with Anglo to discuss the possibilities, “but they very politely told us that the choice for shareholders is a simple yes or no,” he said.

No counter-offer has emerged, despite the high profile of this takeover, which means no other companies are willing to take on the risk of this project.

Nor is the Government, with its hands full with the coronavirus outbreak, the recent floods and the tricky business of Brexit to sort out, likely to step in.

If this deal doesn’t go through next Tuesday, Sirius will have little choice but to place the company into administration.

If that happens, not only do the shareholders miss out, but so does the local community, which will benefit from the thousands of jobs that will be created by the project.

The Northern Powerhouse Partnership has said Anglo’s £405m offer is welcome news for the area and will bring some certainty to the 1,200 staff working on the project at the Wood Smith Mine near Whitby and in Scarborough.

This has been a sorry episode for Sirius’ shareholders, but perhaps it is time to think of the greater good that the mine will bring.

Yes, shareholders may lose a lot of money, but 5.5p is better than nothing.

Yorkshire, as a county, needs to look at the positive aspects of this deal. Anglo is focused on the broader benefits its bid will bring to the region.

It will put in the necessary finances, it has the expertise to run the mine successfully and it is committed to Yorkshire and to raising the employee numbers.

North Yorkshire is a region with a proud mining heritage and Anglo is keen to develop this.