Asic challenges Forrest's Poseidon deal

The corporate regulator has objected to an underwriting deal under which Andrew Forrest’s Squadron Resources could end up with as much as 61 per cent of Poseidon Nickel.

The Australian Securities and Investments Commission has gone to the Takeovers Panel objecting to the terms of the underwriting agreement, which underpins Poseidon’s current $75 million capital raising.

“Asic submits (among other things) that the control effect of the entitlement offer exceeds what is reasonably necessary for the fundraising purpose,” according to a statement from the Takeovers Panel.

Asic is seeking an order that would require Poseidon to gain shareholder approval before it would be allowed to issue shares that would lift Squadron’s stake above 20 per cent.

As an interim step, Poseidon has undertaken to the panel that it will not issue shares under its entitlement offer until September 19.

Poseidon announced its capital raising plans last month, with the proceeds to be used to fund development of its Black Swan nickel plant and two associated mines.

It has already completed a $5.8 million share placement, which lifted Squadron’s stake from 12.3 per cent to 18.01 per cent.

Squadron, which is part of Andrew and Nicola Forrest’s Minderoo Group, has also agreed to sub-underwrite a $68.8 million entitlement offer.

Poseidon’s prospectus discloses that Squadron could potentially increase its voting power in Poseidon up to a maximum of 60.96 per cent under the entitlement offer and sub-underwriting arrangements, assuming no shareholders other than Squadron and its associates take up their entitlement.

Prior to the Takeovers Panel announcement, Poseidon requested a trading halt in its shares while it undertakes a book build for the shortfall under the entitlement offer.

The panel said no decision had been made whether to conduct proceedings.