25/06/2008 - 22:00

Investors turn up heat on Firepower

25/06/2008 - 22:00

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The fallout from mystery fuel-additives group Firepower continues to grow with up to 600 Western Australian investors facing the prospect that their shares could be worthless.

Investors turn up heat on Firepower
On Fire: Ross Graham is attempting to aquire a controlling interest in Firepower. Photo: Grant Currall.

The fallout from mystery fuel-additives group Firepower continues to grow with up to 600 Western Australian investors facing the prospect that their shares could be worthless.

Insolvency specialist Bryan Hughes from Pitcher Partners said he had been inundated with calls from investors since it was revealed that he had advised Perth businessman Ross Graham in his attempts to buy control of Firepower.

"I have been contacted by a large number of shareholders who are clearly concerned and want to know what is going on," Mr Hughes said.

Mr Hughes said he was weighing the options available as a next step, bearing in mind that another party was already attempting to wind up a Firepower entity understood to be the main representative of the group in Australia.

He said there were about 1200 investors, about half of which were in WA.

Many appear to have been sold shares in 50,000 parcels via a network of financial advisers at prices ranging from as little as 10 cents per share to as much as $1.

Shares were advertised this week for 5 cents each by Criterion Holdings Pty Ltd, a company linked to Adrian Fini, who admitted he himself had bought shares in the company.

"Everyone in the world has them," he said, reflecting the widespread reach of the Firepower proposition which was sold heavily in 2006 and 2007.

Another Perth businessman, Warren Anderson, has reportedly made $20 million selling Firepower shares.

Mr Graham has committed about $20 million to the group, almost equally divided between debt and equity, and is viewed as having kept the group's very public sponsorship of the Western Force rugby team alive.

In mid 2007, he also invested significantly in a WA-based company which distributes Firepower's liquid fuel conditioner products throughout Australia and the pacific.

Mr Graham is understood to have become wealthy through direct involvement in mining but is better known as the head of mining equipment sales and rental group Executive Traders, which has also been a big sponsor of rugby in WA.

Last week, he issued a statement claiming he had been attempting to acquire a controlling interest in Firepower to rescue the business, but those negotiations had failed.

"Our recent investigations into the Firepower group have revealed that any such rescue proposal may have been unenforceable due to the complexity of Firepower's structure and the multiple, opaque jurisdictions where the companies are registered."

Mr Graham said that he would pursue all appropriate legal avenues to recover his debts.

The businessman's biggest problem will be unravelling the mystery of Firepower to determine what exactly he has invested in.

Last year, the wife of Trevor Nairn, a former executive with Firepower's predecessor TPS Group Pty Ltd, took legal action against Firepower's key promoter Tim Johnson, claiming his share of the business had wrongly disappeared following the 2004 and 2005 restructuring of the Firepower Group of companies which appear to operate out of the British Virgin Islands.

That action settled, but it's understood the Nairns have not been paid.

This leaves a big question mark as to who owns the intellectual property, notably the formula itself, and the rights to the Firepower brand.

Interestingly, an unnamed newspaper advertiser offered for sale the exclusive Australian rights for Firepower International's Firepower Pill last week.

On top of the ownership question comes the actual performance of Firepower's products, with many believers adamant that testing and use in transport and mining operations has proved successful.

WA Business News obtained a document outlining the various test claims but has yet to verify any of them.In the document, Gull Petrolium (sic), presumably Kwinana-based Gull Petroleum, is listed as a "top 20 project".

Notes on the document show Gull was to conduct final trials three months ago and expected to purchase $US216,000 per month between April and December this year.

Gull chief executive Wayne Ferrell denied this. "We have limited experience with the product," he said.

"As company policy, if a supplier, in this case Firepower, is unable or unwilling to detail exactly what is in the additive we would not use it in our fuel."

"We proudly stand behind our product and you would understand this is difficult to do if you're unaware of the composition and effect of any additives used in it."

"Firepower, as I understand it, have to date been unwilling to provide such details to us."

Tasmanian-based, Chinese-controlled Australian Bulk Minerals denied knowledge of dramatic test results at its Savage River Mine near Burnie, where the Firepower document claimed February tests on trucks showed 9 per cent fuel savings and 35 per cent emission reductions.

ABM chief executive Dave Sandy confirmed the product had been tested on one truck which, after having its fuel system cleaned and then run with the additive had produced fuel saving of 5-8 per cent.

Mr Sandy said further trials were suspended when Savage River management became concerned about the supplier's legitimacy. He added that he was not sure that some of the savings may not have come from the act of cleaning the fuel system itself.

In discussions with various sources, Barrick Gold Corporation is held up as the best example of Firepower's performance. However, WA Business News' efforts to establish evidence of 11 per cent fuel savings for haulpaks at Barrick's Australian mines failed, with the company's procurement officials only finding evidence of sales pitches by Firepower staff.

Firepower documents show Barrick Mines (sic) supply was to have commenced in May this year with 12 barrels valued at $US216,000 for the first monthly order. This was expected to grow to $US432,000 per month by December.

Barrick said its NSW Cowal mine and its Kalgoorlie Superpit joint venture - KCGM - had been approached but no purchasing decision had been made. Not all Barrick minesites had responded at the time WA Business News went to print.

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