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Phosphate Resources board forced into rights back down

THE battle for control of Christmas Island miner Phosphate Resources Limited has taken another turn with the company’s board backing down from its plans to conduct a $4.2 million rights issue.

The Takeovers Panel has advised that it has accepted the undertakings from Phosphate Resources’ board that for the next 12 months it will:

p not proceed with a rights issue that could lead to largest shareholder Asset Backed Holdings increasing its shareholding above what it would have been entitled to acquire under the 3 per cent creep provision allowed under corporations law; and

p not proceed with an underwriting of any rights issue by Asset Backed unless, in each case, shareholder approval is gained by ordinary resolution ignoring any votes cast by Asset Backed and its associates and Asset Backed’s directors and their associates.

Asset Backed’s directors Michael Perrott, Peter Huston, David Argyle and Antony Rigoll are also directors of Phosphate Resources. Indeed, Mr Perrott chairs Phosphate Resources.

The $4.2 million rights issue came not long after the unlisted public company had undertaken a $4.2 million share buy-back.

Asset Backed did not take part in that buy-back and, when it was concluded, its shareholding increased from 19.9 per cent to 26.7 per cent.

When the rights issue was announced, Asset Backed was to underwrite $2.7 million of it. If the rights issue had closed undersubscribed, Asset Backed’s stake could have risen to nearly 40 per cent.

Phosphate Resources shareholders are trying to call an extraordinary general meeting to have the miner’s board spilled.  That meeting is likely to take place in March.

Mr Perrott also chairs Aliquot Property Management, another company embroiled in shareholder controversy. Mr Huston and Mr Rigoll are also directors of that company and Asset Backed is its largest shareholder.

Aliquot’s board faces a boardroom spill driven by second largest shareholder Equitilink eLink chairman Paul Crowther at an extraordinary general meeting called for February 18.

Aliquot’s board has served a writ of summons on Equitilink that seeks damages and an injunction against Equitilink from “republication of the misleading and deceptive representations” they claim it made in a circular to shareholders on December 23”.

Mr Crowther said the writ would not affect the meeting.

“The writ seeks to put an injunction on me after the meeting because I have 21 days to file a defence and that takes us to after the meeting,” he said.

Mr Crowther has also engaged financial investigator John McGlue to “investigate all the other companies that Perrott and Huston have been involved in”.

“I’ll use Mr McGlue’s report in the battle,” he said.

The Australian Shareholders Association and Mr Crowther have accused Aliquot’s directors of draining the company of funds through related party transactions to Troika Management and Commerce Australia.

Mr Perrott has denied that the related party transactions were excessive, saying they represented fair payment for services rendered.

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