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Dual challenges await Christmas Island miner

CHRISTMAS Island phosphate miner Phosphate Resources Limited faces dual challenges to its fund raising plans, with a board spill campaign being threatened by disgruntled shareholders and the Australian Securities and Investments Commission placing an interim stop order on its rights issue prospectus.

Both actions relate to a $4.2 million share buy back that the unlisted public company conducted in the middle of last year, followed six months later by a  $4.2 million rights issue.

Amidst this turmoil, the company is also negotiating with the Federal Government for compensation regarding mining leases that are being resumed to make way for an immigration detention centre, a proposed space port and extensions to the island’s airport.

Some shareholders are concerned that the buy back followed by the proposed rights issue could give major Phosphate Resources shareholder Asset Backed Holdings a 39.6 per cent stake because it is underwriting $2.7 million of the rights issue.

Asset Backed directors Michael Perrot, Antony Rigoll and Peter Huston are also members of Phosphate Resources board. Mr Perrot is the miner’s chairman.

An application tendered to the Takeovers Panel on January 2 by Phosphate Resources share-holders Gerry Pauley and Gordon Elkington seeks a declaration of unacceptable circumstances and interim and final orders in relation to the buy back and rights issue.

Before the buy back Asset Backed had a 19.9 per cent stake in Phosphate Resources. By not taking part in the buy back its holding rose to 26.7 per cent.

Both Mr Pauley and Dr Elkington claim that Asset Backed’s holding could increase to 39.6 per cent if the rights issue is not fully subscribed.

They have asked the panel to issue orders preventing Asset Backed from underwriting Phosphate Resource’s rights issue without the approval of all shareholders.

The pair has also requested an interim order that no shares be issued to participants or the underwriter of the proposed rights issue until the matters are determined by the panel.

Panel director Nigel Morris said the panel was still considering the application.

He said the panel was required by law to make a decision within a month of receiving an application, and that it took on average 14 days to reach a decision.

Christmas Island Union of Workers secretary Gordon Thompson, who is also a Phosphate Resources share-holder, said he had a petition signed by shareholders representing 850,000 shares or  27  per cent of the company’s equity calling for a meeting to spill the company’s board.

Mr Thompson said he was confident he had enough shares rallied to his cause to spill the board.

ASIC director of corporate finance Richard Cockburn said the commission had to issue the interim stop order because the application to the Takeover Panel called for it to make orders that could affect the fundraising.

“At the very least the prospectus needs to be updated to tell people the order is in place,” he said.

Mr Perrot said he was aware of the stop order and the board spill attempt but declined to comment because of ASIC and the takeover panel’s involvement.

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