Gemfields
In May 2017 Pallinghurst announced a nil-premium firm offer to acquire the issued and to be issued share capital of Gemfields that it did not already own.

Following the announcement, Gemfields formed an independent committee to consider the terms of the unsolicited offer with its advisers.

The independent committee comprises Graham Mascall (as chairman of the independent committee), Clive Newall, Finn Behnken, Ian Harebottle and Janet Boyce, each of whom the board of Gemfields considers to be free from conflicts of interest in respect of the unsolicited ofer.

The members of the independent committee will act in accordance with their duties as directors and, in particular, in order to protect the interests of the minority independent shareholders of the company.

The independent committee, having received feedback from independent shareholders, has considered the unsolicited offer with its advisers and has unanimously concluded that the terms significantly undervalue Gemfields, its unique asset base and its leading position in the coloured gemstone sector.

“The independent committee is unanimous in concluding that the unsolicited offer from Pallinghurst is derisory and clearly undervalues Gemfields,” states Mascall.

The company has an exceptional management team with a clear strategy to deliver additional shareholder value on a standalone basis from our unique asset base.”

“The independent committee believes the unsolicited offer has the potential to dilute shareholders of the company with inferior assets that offer exposure to more volatile commodities and with less attractive prospects.

The unsolicited offer would appear to be driven by Pallinghurst’s proposed restructuring which seeks to preserve the Pallinghurst investment managers’ own self-interests at the expense of the independent shareholders of the company,” he maintains.

In May this year Pallinghurst announced its development phase was complete with three key assets successfully developed.

These include Gemfields, Tshipi,and Sedibelo.

The announcement continued:

“The development of these assets has created significant uplift in the net asset value of Pallinghurst. This value, however, has not been reflected in Pallinghurst’ listed share price given the complexities in the structure, complex accounting policies which makes comparison to peers difficult and which is compounded by the lack of consolidated earnings and cash flows.

To unlock value, Pallinghurst now proposes to address these issues and implement a restructuring of the group which will include: Making an offer which, if approved and implemented, will result in Pallinghurst acquiring the entire issued and to be issued share capital of Gemfields not already owned by the Pallinghurst group; post the completion of the offer, move to de-list Gemfields from the AIM market of the London Stock Exchange (LSE); the potential conversion to an operating mining company; and collapsing Pallinghurst’s investment structure and simplifying its management arrangements.

Based on the closing exchange rate of ZAR17.14=£1.00 and the closing price of the Pallinghurst ordinary shares of ZAR3.45 on 17 May 2017, being the latest practicable date before the offer announcement, the offer values each Gemfields share at 38.5 pence and values the entire issued and to be issued ordinary share capital of Gemfields at approximately £211.5 million.”