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Sirius Minerals: Hopes dashed as institutional investors snub alternative financing plan

Whilst a shareholder vote is slated in early March and alternative project financing plan was being explored.

Sirius Minerals PLC - Sirius Minerals: Hopes of alternative financing dashed

Hopes that Sirius Minerals PLC (LON:SXX) might regain control of its fate were today dashed as the company revealed that an alternative funding plan would not be viable.

Whilst the shareholder vote on Anglo American’s recommended £400mln takeover approaches some faint hopes had remained amongst some shareholders.

The stalled British mine developer has this month explored the possibility of securing US$60mln of funding to cover an initial scope of work to get its Yorkshire fertiliser project back on track - albeit it would still require some US$2.5bn of additional capital in the future.

READ: Qatar looked at Sirius Minerals rescue package

Despite exploring a debt proposal with a consortium of financial investors, the company failed to secure an ‘anchor’ institutional investor willing to give enough support to the debt plan.

“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,” Sirius said in a statement.

The company repeated its prior warning to shareholders that “if the Acquisition is not approved by shareholders and does not complete there is a high probability that the Sirius Board will place the business into administration or liquidation.”

A shareholder vote at Sirius’s shareholder meeting is slated for 3 March.

At the peak, more than 80,000 individual private shareholders had shares in the Yorkshire mine developer, and many of those were believed to be either first time or relatively inexperienced investors.

Anglo American last month agreed a recommended takeover offer with Sirius’s board. The deal terms reflect the challenging position that Sirius was left in after its financing plans collapsed with the mine development project only partially complete.

Pitched at 5.5p per share, the offer price values the troubled British firm at just over £400mln.

Quick facts: Sirius Minerals PLC

Price: 5.155 GBX

LSE:SXX
Market: LSE
Market Cap: £361.89 m
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