24/06/2015 - 12:22

Padbury faces legal action

24/06/2015 - 12:22

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The corporate watchdog has begun civil penalty proceedings against Padbury Mining and two of its directors over statements made last year claiming the company had lined up $6 billion in equity to fund construction of a port and rail network at Oakajee north of Geraldton.

Padbury faces legal action
Padbury Mining managing director Gary Stokes.

The corporate watchdog has begun civil penalty proceedings against Padbury Mining and two of its directors over statements made last year claiming the company had lined up $6 billion in equity to fund construction of a port and rail network at Oakajee north of Geraldton.

In the Federal Court next month, the Australian Securities and Investments Commission will allege that Padbury, its managing director Gary Stokes and chairman Terence Quinn, had been misleading when the company announced it had entered into a funding agreement with a mystery backer.

In April last year, Padbury announced to the ASX that it had secured $6 billion in funding for the development of the Oakajee port and rail project.

The announcement was made after the company had already entered into an agreement with the mystery backer.

ASIC and the ASX lodged enquiries to Padbury concerning the deal, including disclosing the identity of the mystery investor, which was later revealed to be entities associated with Sydney-based hair regrowth entrepreneur Roland Bleyer.

Following the enquiries, Padbury announced that the funding agreement had been terminated.

ASIC said the announcement was misleading because the funding agreement was subject to conditions precedent that had not yet been met.

“The conditions precedent required Padbury to procure some $1.3 billion in demand guarantees in three tranches,” the watchdog said, adding that it also failed to disclose the identity of the funding providers at the time.

ASIC also said Padbury had failed to independently verify if Mr Bleyer’s entities had the capacity to provide the funds, and the directors were involved in the breach by the company of its continuous disclosure obligations, and thereby breached their own continuous disclosure obligations under the Corporations Act.

If found guilty, Messrs Stokes and Quinn will be fined and possibly banned from managing companies.

“ASIC is also seeking declarations that Padbury breached its continuous disclosure obligations and engaged in misleading or deceptive conduct, and that Messrs Stokes and Quinn breached continuous disclosure laws and their directors’ duties,” ASIC said.

Padbury’s shares remain suspended from trade after the company requested voluntary suspension in December.

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