Proposed buyout has some shareholders feeling like the company bought high and sold low as it tries to steer investors from cobalt to nickel
Toronto-based Cobalt 27 Capital Corp., which billed itself as an investment in the electric vehicle revolution, is facing outcries from some of its largest shareholders as it tries to sell its most valuable assets during a market low-point.
The company roared into the market in mid-2017 with an initial public offering, ultimately raising hundreds of millions of dollars to stockpile and acquire royalties on cobalt, an essential metal used in lithium-ion batteries. Within about a year the price of cobalt had hit a five-year peak, only to crash in the latter half of 2018 and never fully recover.
Now the company wants to steer its investors into nickel and to sell its main cobalt assets to its largest shareholder, Pala Investments. Other shareholders would receive $3.57 in cash, plus equity in Nickel 28, a new company that would hold the remaining assets including a stake in a nickel mine in Papua New Guinea.
But with just days left for investors to vote on the deal, several shareholders raised protests that the sale came just as cobalt prices bottomed out, about the executive compensation included in the deal and other issues.
“We do not want to sell an asset today knowing in two years it will be worth more,” said Etienne Guicherd, an investment manager at the Paris-based mutual fund Amiral Gestion, adding his firm owns around three per cent of the shares.