Oswals, Stowe fall-out a cautionary tale of what can happen when the dream fades

WHEN Pankaj Oswal emerged with a 5 per cent stake in listed Phosphate Australia in late 2008 – a little more than $2 million for 5.5 million shares at an average of 36 cents each – he was at the top of his game.

It was one of the few public investments for the Indian-born tycoon who had established himself at the cusp of being among Western Australia’s most wealthy private citizens – a list that has remained largely unchanged for many years.

The Phosphate Australia play was a minor one. Compared to his Burrup Fertilisers joint venture with Yara International in the north-west, or even his landholdings in Peppermint Grove, the Phosphate Australia investment was a drop in the ocean.

At the time he was thought to be worth around $500 million, with huge cash flow being generated by the fertiliser business he had started, and was embarking on the construction of a $70 million home in Perth’s most exclusive suburb. He was also looking well and truly beyond fertilisers, touting plans for a $1.5 billion solar energy plant.

All that changed late last year when a rancorous disagreement with Yara was followed by the intervention of ANZ Banking Group, which appointed receivers to Burrup.

Since then, much of the Oswal empire has been put up for sale, including a big block of land at Baldivis and the half-finished mansion as Mr Oswal and his wife, Radhika, have taken the fight to regain control of Burrup.

Almost as an aside, early this year he sold 1.4 million Phosphate shares at 10 cents each, ceasing to be a substantial shareholder in the company for the first time since 2008.

Mr Oswal recently stepped up his criticism of the sale process of the ammonia producer, and revealed that he has a claim for $US500 million against the company, which is currently in receivership. He has started proceedings in the Supreme Court of Victoria seeking orders declaring the appointment of receivers PPB Advisory to be invalid and removing them from the role. His wife started similar action earlier this year.

The court battle, run by the Oswals from offshore bases in India and Dubai, is expected to be protracted.

It would not be a first for a wealthy private citizen in WA. 

The most recent similar event was that of coal mining magnate Rick Stowe, whose Griffin Group ran into trouble in late 2009 as the GFC continued to send shock waves through debt markets.

Mr Stowe’s financial fortunes were looking rosier this year following agreements by the receivers of his companies to sell the coal assets to Indian company Lanco Infratech, and the Bluewaters power station to the Japanese companies Kansai Electric Power and Sumitomo.

Lanco Infratech paid $750 million for Griffin Coal earlier this year, but has since sought to change coal supply contracts with the adjacent power station and other customers.

The move threatens to scuttle the $1.2 billion sale of Bluewaters.

In all likelihood, the Monaco-based Mr Stowe would have been the recipient of significant proceeds from the power station sale.

Like the Oswals, Mr Stowe also had significant landholdings, which were put up for sale. A 2,470-hectare property, Devereaux Farm, failed to go to auction in May. Speculation at the time suggested that it could sell for around $50 million, well below the original $68 million asking price.

A beachfront property in Swanbourne was also touted for sale early in 2010 but property searches suggest the property has yet to change hands.

The reclusive Mr Stowe may yet return to the list of private wealth in WA, depending on the outcome of events that might be out of his hands.

By contrast, the Oswals are unlikely to return to WA even if they were successful in their court battles, having made a sudden and high-profile departure from the state late last year.

A newcomer has filled the vacancy created by their absence from the private wealth list, with BRW putting 81-year-old John Simpson of Summit Homes Group on its list after discovering his name linked to a big property deal in Victoria.

Another addition is Sterling Buntine from the Buntine family's pastoral holdings. He debuts at $285 million in the Business News survey.