Gilbertson’s scion battling fierce Tanzanite One
The battle for Tanzanite One (AIM:TNZ.L) is intensifying as proposed bidder for the company Gemfields (AIM:GEM.L) has challenged steps taken by its non-executive directors that allegedly diluted general shareholder interests and stripped the company of cash in a weakening tanzanite market.Gemfields CEO Sean Gilbertson said after the company wrote an "open letter" to the Tanzanite One board Thursday, it appeared that three non-executive directors of the company--who hold about a 20% stake in the company--have neglected to remind shareholders they own part of the tsavorite assets the company is buying.Gilbertson said the company (Tanzanite One) resurrected the previously announced transaction with TsavoriteOne after the announcement of Gemfields’ proposed bid for Tanzanite One, thereby increasing the three directors’ interest in Tanzanite One at the expense of other shareholders. Tanzanite One is the biggest miner of the blue-violet tanzanite gemstone only found in the east African nation of Tanzania.The Gemfields CEO said Tanzanite One did disclose its interest in TsavoriteOne assets at the time of the first announcement of the transaction a year ago, but has said nothing about their interest since. Tanzanite One is issuing an additional 7.45m in the company, amounting to 10% of its issued share capital, to acquire TsavoriteOne and its assets.Gilbertson, son of former BHP Billiton CEO Brian Gilbertson said this could imply the directors were not acting in the interest of the company’s greater shareholders, but were instead "milking the cow" themselves.He said the directors had lifted the latest company dividend as they increased their holding in Tanzanite One, effectively distributing the company’s cash and leaving it with only $1.3m while announcing expansion plans.Gemfields was also concerned about Tanzanite One’s alleged "inability to specify the grade of the 20mt tsavorite deposit it is acquiring" saying that it was impossible to determine the economic value without.Gilbertson said Tanzanite One would make an official bid for the company very difficult if it continued to buy assets of questionable value. Gemfields and Pallinghurst together have bought on the market 13.7% of Tanzanite One shares and have a conditional irrevocable undertaking to buy an additional 19%.Gemfields, a subsidiary of Pallinghurst Resources, was very interested in Tanzanite One as the acquisition would be logical step in the consolidation of the gemstone sector and would immediately establish the world’s "number one colour gemstone producer". It would also afford it the opportunity to place the top Tanzanite One brand in the same company as the Faberge luxury goods name.Gilbertson said Gemfields was awaiting a response to its open letter from the Tanzanite One board and would launch a formal offer for the company once it agreed to reduce its price. He felt that Tanzanite One should be mindful of President George W. Bush’s comments on the United States, its main market, in determining the company’s price.Gemfields Resources Plc, which has rights to the Faberge luxury goods brand, has made a 33 million pound (US$58.10 million) takeover offer for Tanzanite One Ltd to expand its range of products from emeralds, it said on Friday.Tanzanite One responded to Gemfields’ allegations today saying the company has obliged with all relevant AIM rules and regulations with respect to the tsavorite acquisition.The company took a swipe at Gemfields by stating that "unlike Gemfields, TanzaniteOne is a profitable business generating income for its shareholders on a consistent basis."The recently announced dividend reflects management’s ongoing confidence in the Company’s performance. The Board consistently monitors its cash position and cashflow generation and is confident that it has sufficient financial resources to pursue and fulfill its strategy to become the world’s largest producer and supplier of premium coloured gemstones."