18/03/2010 - 11:06

JP Morgan loses $50.8m ConsMin case

18/03/2010 - 11:06

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Investment bank JP Morgan has lost its $50.8 million court battle with manganese miner Consolidated Minerals over a takeover fee dispute from 2008.

JP Morgan loses $50.8m ConsMin case

Investment bank JP Morgan has lost its $50.8 million court battle with manganese miner Consolidated Minerals over a takeover fee dispute from 2008.

The New South Wales Supreme Court today ruled in favour of ConsMin, which Justice Hammerschlag deemed had been charged too much for services provided by JP Morgan related to ConsMin's successful takeover by Gennadiy Bogolyubov's Palmary Enterprises in January 2008.

The court ruled that JP Morgan was entitled to total transaction fees of about $19.25 million, which is substantially less than its $86.9 million claim, when originally filed in early 2008.

However, JP Morgan re-submitted its claim in 2009, lowering the alleged fee to $50.8 million claim.

ConsMin had cross-claimed that terms of the contract with JP Morgan were superseded by a telephone call of July 2006 between senior executives of the two companies who verbally agreed that the bank's advisory fees would be capped at $7 million.

ConsMin had paid JP Morgan $20 million as a full and final settlement.

The miner accused the investment bank of misleading or deceptive conduct in relation to the fee cap, double and triple charging for the same non-service in a losing takeover defence, and demanding money out of line with its practice with other clients.

"We welcome the court's decision and it is a win for all shareholders who should not be subject to the excessive contractual terms of investment banks," Mr Bogolyubov said in a statement.

ConsMin was de-listed from the Australian stock exchange shortly after the $1.3 billion takeover, which had involved a protracted bidding war with Brian Gilbertson's Pallinghurst Resources and, to a lesser extent, iron ore miner Territory Resources.

"The acquisition of these Australian assets was very important to me," Mr Bogolyubov said.

The billionaire said the company could focus now on "creating value and longevity" at its Woodie Woodie manganese mine in Western Australia.

The mine became ConsMin's key focus after the global financial crisis forced it to place its Kambalda nickel mine on care and maintenance, and downsize its Coobina chromite mine, both in WA.

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