Nordgold is about to cancel the listing of its Global Depositary Receipts (“GDRs”) from the official list and from trading on the London Stock Exchange, the comapany announced.
Despite the strong operating and financial performance and a proven ability to deliver returns to shareholders, enhanced by an extensive GDR buyback programme conducted by Nordgold in 2015 and 2016, the market capitalisation of the company has failed to increase in line with the market, and in particular against its peers, during a period of a major gold price rally. As a result, the Board believes the market capitalisation does not accurately reflect the true value of Nordgold. The Directors believe, that the principal reason for this undervaluation is the very low trading volumes and general lack of liquidity in the GDRs, caused by the Company’s capital structure, and that any changes in its performance are unlikely to overcome this structural disadvantage.
The Board’s decision to de-list comes having carefully considered these facts and that an equity placing, even at the current price, would result in the unacceptable dilution of current shareholders. The Board has agreed a key objective for the de-listing is therefore to eliminate the current public market value benchmark, which it believes does not fully reflect the fundamental value of the Company and to consider re-listing in the future, subject to market conditions.
The company offers two variants for its shareholders.
The first one is the tendering GDRs to Nordgold at US$3.45 per GDR (representing the 5-day VWAP for the 5 trading days preceding this announcement) at any point from 9 February 2017 until 12.01 am on 16 March 2017 (being five trading days after the anticipated date of the De-listing) (the “GDR Tender Offer”);
The second variant is the remaining a member of the de-listed Company 1) receiving the benefit of its consistent returns in the form of dividends, as well as the benefit of any potential re-listing of the Company that might occur in future, which the Board believes will value the Company more accurately, and 2) have the additional protection of the right to tender their shares back to Nordgold at US$3.45 per share (representing the 5-day VWAP for the 5 trading days preceding this announcement) on four occasions following the de-listing: after the announcement by the Company of its financial results for each of the half years ended 30 June 2017 and 2018 and for each of the full years ended 31 December 2017 and 2018 (the “Share Tender Offers”).