The stark choice facing Sirius Minerals' shareholders as deadline for vote looms - Greg Wright

BACK the takeover or face the risk of seeing one of the biggest private sector investments in the North of England tumble into administration.

Shareholders in Sirius Minerals must think long and hard before the vote next month, says Greg Wright

That - in essence - is the stark message from bosses at Sirius Minerals to shareholders who are thinking of voting against the acquisition by Anglo American.

The warning from Chris Fraser, the CEO of Sirius Minerals, could not be plainer.

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The team at Sirius has battled massive odds to fight for a mining scheme that could transform North Yorkshire’s economy. Now they are asking shareholders to support a takeover to secure the scheme’s future.

The mining project, which will be Britain’s biggest in decades, is set to create thousands of jobs in the region. The £3.2bn polyhalite fertiliser mine near Whitby will be saved if a £405m bid by mining giant Anglo American gets shareholder approval.

Workers at Sirius Minerals will be relieved at the news, but thousands of local shareholders will be disappointed. Anglo has bid 5.5p per share for Sirius, which is less than a quarter of the 22.4p valuation just a year ago.

Responding to written questions from The Yorkshire Post, Mr Fraser said: “The reality is there is now a stark choice because we haven’t been able to deliver the complete stage two financing.

“That means that if the takeover does not complete there is a high probability that Sirius will go into administration. In turn, that is likely to mean shareholders would lose all of their investment.”

He wants shareholders to read the proposed takeover from Anglo American carefully and seek professional advice before making a decision.

“We don’t currently have any alternative proposal that is implementable,’’ he said. “The board is on record as saying, that, at this time, there is no alternative to the acquisition.”

Mr Fraser and the senior management team will stay in place to oversee the transition.

He added: “I want to thank everyone who has backed the company in whatever way since we started. It has always been greatly appreciated.

He added: “I absolutely feel for people that will see a loss but investment in shares does involve risks.

“It is really important for people to take proper advice and understand the risks and opportunities of investment in shares

“My team and I are all shareholders and are in a similar position. The returns offered by the acquisition are not what we had hoped for but does at least offer some return and the board has been clear about the likely alternative which is much worse.

“I understand people are frustrated because we’ve achieved so much and come so very close to delivering the complete stage two financing in 2019 that would have put us in a completely different position.

He added: “We have worked tirelessly to find a way forward and explored in detail countless ways to bring the billions of pounds needed to finish the project but in the end the acquisition is the only pathway forward for the company.

“It was well publicised in the media at the time, but in our 2017 annual report our chairman made it clear that Government support was essential to support the debt raising for stage two. When it became clear that that process was taking too long and they may not get there we had to look at other options.

“At the same time the proposal from JP Morgan offered more flexibility and we did everything we could to secure and complete that alternative.

“The final piece in the puzzle of that structure was the bond offering meeting certain conditions and we were unsuccessful. US and China trade wars, political leadership uncertainty, Brexit and project construction risks and fertilizer market uncertainty all contributed in some way. It has been an incredibly difficult time to raise money for large scale development projects by single asset companies like Sirius.”

Shareholders at Sirius must think long and hard ahead of the crunch meeting on March 3. If they scupper the deal, they must answer a tricky question.

Who else will step in at the eleventh hour and save this scheme?