LEAWOOD, Kan.--(EON: Enhanced Online News)--Revere Partners, LLC, the investment manager to Revere Capital Partners, LP (“Revere”), as of November 1, the largest shareholder of Jaguar Mining Inc. (“Jaguar” or the “Company”) with a 9.7% stake, is concerned about the board of directors’ (the "Board") approval of a non-binding term sheet (the "Term Sheet") for a recapitalization and financing transaction (the "Transaction") expected to allocate to the current shareholders, upon execution of such Transaction, "minimal or no continuing interest in the Company." Revere considers such terms appalling, is disappointed by the lack of shareholders’ representation in the negotiation (the Company’s directors and officers own only a negligible amount of shares of the Company, and their stock awards are deeply underwater), and expects that the Board will act in accordance to its fiduciary duty to the current shareholders, substantially improving such terms, in the course of the finalization of a binding term sheet.
“minimal or no continuing interest in the Company.”
“Revere has been a Jaguar shareholder for more than one year. Throughout this period we have remained supportive, patient, and optimistic; one of our main concerns has, though, been the absence of any meaningful economic interest alignment between directors and officers on the one hand, and shareholders on the other. The Term Sheet confirms our concern. We had assumed all along that some form of shareholders’ dilution was needed to facilitate the repairing of the balance sheet. In situations like Jaguar’s, shareholders have to pay a price to take part in the eventual re-rating of the Company’s valuation, once the capital structure is re-balanced. But that price has to be fair,” commented Mr. Carmine Di Palo, CEO and Managing Partner of Revere Partners.
On October 10, 2013 based on Q2 results and given the subdued level of gold spot prices in Q3, Revere sent a letter (the "Letter", then filed in a Schedule 13D) to Jaguar's Board, with several thoughts on shareholder value to be considered by the Board in, at that point, the likely scenario of shareholders’ dilution.
“Our assumptions in the Letter are rational and based on market transactions. They have not changed. Our thinking has not changed. Also, our conclusion has not changed: the value of the Company's assets is well above the one implied by the current public market value, and well above the face value of the financial obligations that the Transaction seeks to refinance. In fact, in early 2012 the Company was the subject of take-over interest, at a documented valuation close to one billion dollars; since then, the sector's valuation has compressed but not nearly to the extent implied by the Term Sheet. At the end of Q2, 2013, the face value of the Company's gross financial position was approximately $320 million and the equity book value was $84 million (close to $1/share). If necessary, Revere is ready to pursue all avenues, inside and outside the envisaged Plan of Arrangement, to defend its investment in Jaguar. From a broader prospective, a less than fair treatment of shareholders in a key Canadian sector, like junior mining, currently facing significant headwinds and requiring the continuous support and confidence of the shareholders, could also result in enhanced regulatory scrutiny of the Transaction. Our expectation remains that, in accordance with its fiduciary duty, the Board will be able to submit to shareholders an equitable and fair allocation of Jaguar’s value, once the Term Sheet is finalized. It is in the interest of all the stakeholders to expedite the Plan of Arrangement, promptly moving the Company forward to capture the significant value that lies ahead.”, concluded Mr. Di Palo.
About Revere Partners, LLC – Revere Partners (www.reverepartners.com) is an investment adviser based in Leawood, KS. Its investment strategies are mainly focused on US public equity and range from value to special opportunities. They are long-term and contrarian in nature.