Gemfields continues resistance as Pallinghurst shareholders vote in favour of buyout

JOHANNESBURG (miningweekly.com) – Pallinghurst Resources has received 96% shareholder support for the buyout of the remaining stake in Gemfields, making its offer for Gemfields wholly unconditional.

Brian Gilbertson’s Pallinghurst on May 19 announced its intention to buy out Gemfields’ minority shareholders in exchange for $150-million in Pallinghurst shares and delisting Gemfields from the LSE’s Aim market.

This comes as Pallinghurst, which already owns 47% of Gemfields, seeks to transition to a diversified miner from its current role as an investment fund.

Pallinghurst last week lowered the minimum acceptances required for its proposed takeover of Gemfields from 75% to 60%.

At that time, the company had received valid acceptances from shareholders holding about 14.16% of Gemfields shares, which, with its own Gemfields shareholding of 47.09%, pushed the total to 61.25%, making the offer unconditional.

This was despite an independent Gemfields committee’s recommendation to shareholders that they rather support a rival £256-million offer from Chinese firm Fosun Gold.

“As management, we value and respect this vote of confidence from our shareholders, and will carry out this mandate without delay,” Pallinghurst CEO Arne Frandsen said in a statement on Monday.

The company will now implement a restructuring of Pallinghurst Group, which will include completing the acquisition of Gemfields and delisting Gemfields from the Aim.

The independent Gemfields committee, meanwhile, again on Monday urged its shareholders not to take any action on Pallinghurst's offer, reiterating its earlier statements that the offer "significantly undervalues" Gemfields and its prospects as a significant player in the coloured gemstone sector.

Gemfields' share price on the LSE fell by as much as 5.4% on Monday afternoon.