When we are struggling to make money Atlas decides to buy unmarketable shares to a cost of nearly $2m, what??
This is another one for ASIC to consider, as Directors are they acting in their self interests or their Company and shareholders interest? I expect we have ratted Directors that they have someone reading HC, so take notice, this is your second notice!
Todays newspaper headline and story
"Big Win for Min Res as Atlas buys small stakes"
"The rebellion against Mineral Resources’ $280 million takeover of Atlas Iron has taken a major blow, with Atlas launching a move that could see it compulsorily acquire the stakes of more than half of its individual shareholders.
Atlas yesterday unveiled an unmarketable parcel sale facility that could see just under 17,000 of Atlas’s 31,560 investors disappear from the company’s register.
While Atlas said the move was motivated by the prospect of significantly reducing the company’s administration costs, it is also likely to increase the odds of Atlas shareholders voting in favour of the scheme of arrangement with MinRes.
The fate of the all-scrip 3c per share offer for Atlas from MinRes relies on both 75 per cent of shares and more than 50 per cent of individual shareholders voting in favour of the deal. That second condition is potentially the biggest risk to the deal, given the disproportionate power it gives to shareholders with very small stakes.
Many of the thousands of tiny shareholders on the Atlas registry paid well in excess of the company’s current share price levels — Atlas was once a multi-billion-dollar company with a share price of more than $4 — and are more likely to be against the MinRes offer than many of the larger shareholders who have built their stakes more recently at far lower prices and who have far more money at risk.
Holders of the unmarketable parcels who don’t want to sell their shares will have to opt out of the process.
Atlas’s cumbersome shareholder structure has been in place for almost three years, but its delicate financial position means the company has not previously established an unmarketable parcel sale facility.
The scheme could see Atlas spend about $2 million buying out the smaller holders.
The Chris Ellison-led MinRes is keen to get hold of Atlas to gain access to both its iron ore business — which MinRes believes it can improve through its mining services skills and Pilbara rail infrastructure plans — and Atlas’s port allocation at Port Hedland. Atlas also has more than $500m of accumulated tax losses on its balance sheet that may appeal to MinRes.
Mr Ellison warned after the launch of takeover offer that Atlas was “on palliative care” and would die a slow death without a change in its situation.
In its most recent quarterly, Atlas revealed that its operational losses had widened as the price discount for lower-quality iron ore rose. Its cash on hand had fallen from $71m to $64m over the course of the March quarter."
AGO Price at posting:
3.0¢ Sentiment: Buy Disclosure: Held
