- They both don't see much more upside in Century and have decided to reduce their holdings and have found someone willing to buy at current or close to current market prices; or
- They are both exchanging their Century shares for shares in Polyrus to help Polyrus increase the public float in advance of their planned IPO this summer; See Glorieux's post at Agoracom ; or
- They are transferring their shares to a possible acquirer of Century at a price that is much higher than the acquirer intends to offer other shareholders.
I was never much concerned with a takeover offer from anyone, like Agnico-Eagle or one of our other neighbours, because such a bid would never succeed if Scola and Finisky were not interested. However everyone has a price and Scola's and Finisky's price is probably a lot higher than 80 cents or $1.00. They might be convinced to sell for $2 - $3/share though - a nice return on 20-cent shares and 30-cent warrants.
If you lock up a substantial percentage of the Finisky and Scola shares for $2.00 to $3.00/share that is also based on their agreement to sell the balance at the official offer price of say 85 cents to $1.00, then a takeover offer is infinitely more likely to succeed than if everyone, including Scola and Finisky, got an offer of $1.00/share. The Scola/Finisky controlled BOD would likely approve such a takeover bid.
If Century meets their production targets as laid out by Daniel Major on the CC a couple of weeks ago, $1.00 will be seen as extremely cheap for this company later this year. Therefore the time to move is now while there are no significant institutional shareholders and many retailers that bought in at lower prices would jump at an offer of $0.85 to $1.00. As we've seen this week, many are willing to part with their shares for 65 cents or less, so you can imagine how many would accept 85 cents or $1.00.
20 comments:
Hi Carib
Glad to read what you had written. Should there be a takeover as U are inclined to thk, it does seem retail investors will not be eaten up by some slimmy scoop though the offer may not be most optimum (assume $0.80-$1.00). Will CMM be delisted should such a takeover come to pass?
Thanks Carib. All of those possibilities make sense.
Wingfong, the possibility you mentioned in your last comment makes perfect sense also, especially if a powerful investor was interested in making an significant investment in Century (they would be hesitant to do so until the existing influential investors became less influential).
I was also thinking about if they are moving their shares out of their hands in order to allow the shares to be voted in a related party takeover. For example, Finskiy is on the BoD of Polyus. If I was to guess, I would guess that he would not be able to vote any of his shares in a takeover attempt by Polyus, being an insider of that company.
If he moves 25 million common shares to an (officially) non-affiliated party (even though they may be affiliated non-business wise, i.e. friends), as well as 25.5 million warrants, it might be then possible for 50.5 million common shares to suddenly be allowed to vote in a takeover attempt by a related party. The person or group now in possession of the 25.5 million warrants would need to exercise them for common shares (to enable them voting rights), but that can be done anytime (being cheap, well in the money, $.30 warrants).
Under this theory the reason Scola would also need to sell his shares to enable them to become voting shares (even though he is not a BoD member of Polyus and a direct Polyus insider) is because I believe his shares carry dual voting privileges, between him and Finskiy. I remember reading info in the SEC report I linked to the blog on September 2nd of last year (the link no longer works - the report should still be filed in EDGAR though). If true, Finskiy still being listed as having dual voting rights for Scola`s shares, Scola shares would then be tossed out in a Finskiy affiliated takeover, unless Scola has been recently selling his shares to official non-insiders (i.e. friends).
I guess we will have to wait to find out what the real story is. It is impossible to know right now.
Hi Prod05
Interesting to note your view from another angle. The plot does seem to get more in depth and along strikes (mining parlance). As U had said, we need to wait to know the true story. Hope it does not take too long.
Production, that is a very insightful post and connects a lot of dots. It is looking more likely that the insider sales have a Polyrus connection, but I hope not.
This is one time where I'd prefer the two birds in the bush to the one in the hand.
Wingfong, if Century were taken over, they would naturally be delisted.
Carib
Just for discussion. Assuming there is such a takeover. My question is it is quite possible the sheer momentum caused by the news outbreak will take the sp to $1.00 since it is not that far off from current prices achieved. As such, will the potential acquirer still be interested if he has to up the offer to say $1.35-$1.50?
Carib
I feel the same reluctance too for the folowing reasons:- 1) With current 6Moz in the ground n potentially more will be added sooner than soon n probably quietly edging towards a 10Moz count in all catagories just based on what is in the Lamarque ground 2)the 220 sq metre San Juan hardly has its potential drawn out. I always have the feeling that this pce of SJ land is kind of like an unpolished diamond. Never forget one bit the potentially co-making Erika copper-gold-silver porphyry syetem that has a tentative 500mton resource profile
3) The other NWT n Alaskian land positions
4) By and large we have almost gone tro the mine development birth pains n to me the CEO give the impression that he is likely to bring progress to the co
5) The current price of gold and potential gold prices near to longer terms are nothing but positive.
So why should there be a hurry to sell at $1? $1.35? or $1.50?
In a few months' time we will be seeing declaration of commercial production, a move to 2000tpd/100Koz production rate n actually weighting 100Koz solid gold by year end! When these are perceived to prevail or have come to pass, a sp of +-$1.20 will surely be strongly argued for judging from what the market is rewarding similar miners and those that are of lesser grade than CMM! As such, since we are able to reach $1.20 by "our natural means" in the forseeable months, is there any merit in an offer even at $1.50?
Prod05
Under your possibility, if 50.5 million shares vote in favor, that leaves more than 400 million shares outstanding. I've seen a listing somewhere (can't find now) of the % holding of significant holders. I'm also not sure what quantity of shares are held by retail.
As at Jan 11/2011
Issued and Outstanding 407,463,445
Warrants 48,933,402
Options 14,565,000
Fully Diluted 470,961,847
It would be very hard to determine a scenario based on the above in terms of who would accord with a takeover bid (depending on its terms of course $0.85cents is very different that $1.5)...
Correct me if I'm wrong:
Under a takeover bid, (let's assume in this case it would be cash rather than non-cash - i.e. shares of bidder), doesn't the bidder require 90% (other than shares owned by bidder at bid) to effect a compulsory acquisition? There is also an alternate scenario wherein if the bidder acquires 66%-90% of shares a squeeze out situation can arise (however this would take more time as it is a 2 step process).
Therefore, to expedite the process if the bidder believes they are likely to acquire in the 66%-90% range a merger/acquisition might be the best route. As such, CMM would be amalgamated with an affiliate of the acquirer and all of CMM's shareholders would exchange their shares for whatever consideration is being offered (either cash or shares of the acquirer)
I would be surprised if greater than 90% vote would occur ,therefore am more inclined to think the merger/acquisition scenario more likely.
Hi Carib,
Good analysis of possible options/reasons for the moves by Scola & Finskiy at this time. The question is what are or will be the options for us retail shareholders in case of a takeover/merger situation. Unfortunately, we are under-represented on CMM's BoD by the two independent directors.
We also know that the upside potential of the share price is huge based on existing and potential resource estimates (did not PK say some time ago that she would not accept anything less than $7.00 for her shares?!).
So the questions for us to ponder: what position are we going to take individually (&collectively?) if an offer is made for our shares? What do we consider as "fair value"? What are our legal options (if any) to block an "unfair" takeover?Personally, I would opt for collective action.
Hi Doc,
My guess is that (assuming a Polyus attempt) Finskiy would likely not be able to vote his remaining 112 million shares, thus the potential maximum voting shares would be 408M less the 112M plus the 25.5M warrants that may be exercised.
I think you are on the right track with your takeover explanation. I am not going to comment too much. It has been a while for me. I would need to brush up on all the legal scenarios in order to feel comfortable about the takeover possibilities.
However, off the top of my head, there might be 2 scenarios that might be the most impacting:
1) If they get 2/3 of the votes then there are likely steps they can subsequently take to get the squeeze out of minority. As you mention, it would be a longer process (if they don`t get 90% or greater of the votes immediately), but they would likely get there (a squeeze out) eventually, if they get the 2/3.
2) If they don`t get 2/3 of the votes on the first takeover try then a squeeze out will likely be very difficult for them. They could go forward and acquire the shares they got in the voting, and add to Finskiy`s 112M remaining SEDI shares they could acquire privately (or through the offer take up process). They could then - over time - acquire shares via the open market and shares via other private transactions (by offering slightly higher prices to shareholders ready to throw in the towel). I think they could go through the process over time to try to accumulate 90% - without another takeover bid - in order to squeeze out minorities. It would be very difficult though and would take a very long time (and there is no certainty it would succeed). A second takeover attempt is most likely, with perhaps a higher offer price.
If management from Polyus (or which ever other company that looks at Century) is wise then it would be in their best interest to make the offer very favourable to Century shareholders (don`t penny pinch).
There is recent precedence of Russian IPO failures/postponement/difficulties partly due to the perception of undercutting minorities and not allowing true value of minority shared assets to not be realized prior to the IPO of the parent company.
If Polyus is looking for a summer IPO then I wouldn`t recommend they play games with Century shareholders. Although anything is possible - it might be possible to have success with a lowball offer - it is risky for Polyus to offer a lowball offer if they are urgently trying to get the London IPO in the summer, in order to merge with another major gold producer later this year. Century is small potatoes. No point playing games with Century, and risk a delay, when the big prize is waiting to be had later in 2011 (and is directly dependent on a successful London IPO). However, you just never know what will happen when greed takes control (logic sometimes get surprised - again, there is recent precedence with Russian companies, IMO).
By the way, I would be surprised if it`s a cash offer (though, again, anything is possible) - of course, assuming there is an offer (remember this could still all fizzle out at anytime). I think Polyus is looking for more free float in order to reach the 25% (the London Exchange appears to have made mandatory, or so it seems).
bigjohn, I remember the cc when Peggy made the comment about $7 being fair value for Century shares, but we probably have 3 times as many shares now and not much increase in assets to show for it.
I've added a poll to gauge what blog readers think is fair value at this time and the minimum price per share they'd be willing to part with their shares. These polls can certainly be manipulated by anyone with an agenda, so they are not very scientific.
Hi carib
I wonder if its not time for the anonymous how many shares do you have poll open for a few days as most shareholders check quite often and will reduce error with double counting etc that way we can get some type of estimate of how much weight at least the blog crew have to offer cheers doc
Doc,
The poll won't be reliable in any way to determine how many shares the stockigloo community own. Regularly a poll goes on for < month and in that time frame people can vote multiple times because people will throughout a month either.. reset their internet browser cookies (letting them revote), use another computer to view this blog and vote or just to screw with the results. I might have misread what you were trying to say altogether
For take over price, although however unlikely it might be, I'd sell my shares for $1.30-$1.40. I'm honestly surprised this isn't over $1 yet, seems like the market is looking for 100% confirmation before entering into this one.
BTW is anyone somewhat nervous about audited statements coming out late again? I feel like the IFRS GAAP changeover this year might be another reason they can justify delayed statements.
I was told that financials will not be an issue this year at all. They are aiming to have them out by the end of March. This stock is slow to rise but wether we get an offer or not, this stock should be well over $1 in the next 3 months. We seem to have a perfect storm to make this happen:
PoG back over $1400 with momentum
Cashflow positive any day now
Commercial production in the next 3months
New 43-101 Resource estimate
Chart looking strong
Buy out rumor should also provide good support
Agree there are several forcoming catalysts to give support to the sp besides the accomodating gold price. Expect the recent high of $0.87 will be taken out n crossing over $1.00 soon. Glad to know that there will be no problem with the financial reporting. Cheers!
Doc,
I sort of agree with Gilmourr on not having a poll to ask readers about share ownership, but not so much that they can vote multiple times, but because the responses can be wildly fabricated. Without any means of verification, the poll would have little value.
Thanks to my buddy RB for this info:
http://www.stockwatch.com/nocomp/newsit/newsit_sedardoc.aspx?docid=2323634
So, in this Sedar filling, they announce a special meeting where they have set up dates for voting and Beneficial ownership. This date is set for March 8th 2011. So what ever is going on corporately, it seems we will have all the details within a few weeks here. The fact that CMM is scheduling this means that this is not a hostile take over but rather a merger type situation IMO.
Glorieux
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