The relationship between the PharmAust Ltd board and its former managing director, Paul D’Sylva, has further soured with the company initiating legal action over his handling of the business.
The relationship between the PharmAust Ltd board and its former managing director, Paul D’Sylva, has further soured with the company initiating legal action over his handling of the business in what has become a tit-for-tat battle likely to be played out in Western Australia’s court system.
PharmAust’s lawyers, Lavan Legal, have prepared a writ against Dr D’Sylva, to be lodged with the Supreme Court of WA.
The action comes after Dr D’Sylva, who resigned from PharmAust in August, made a statutory demand to the company in a bid to recoup money he claimed was owed to him under the terms of his executive service agreement.
WA Business News understands that the action has been withdrawn
However, it is believed Dr D’Sylva still intends to pursue the company for leave entitlements, and superannuation and termination payments.
It’s understood Dr D’Sylva is seeking about $350,000.
Dr D’Sylva moved to the US earlier this year to become managing director of PharmAust’s 39 per cent-owned subsidiary, Commonwealth Biotechnologies Inc.
While he still manages the business, he is believed to have resigned from PharmAust following a dispute with the board over funding options for the Welshpool-based company.
PharmAust has been at the centre of an ownership dispute this year, and its share price has underperformed for some time.
The company is yet to make a profit.
PharmAust director Simon Owen said the company’s actions with regard to Dr D’Sylva were related to management and transactions undertaken during his tenure.
Mr Owen declined to be more specific until a Statement of Claim was lodged.
He said PharmAust intended to fight Dr D’Sylva’s claim for entitlements.
News of the legal battle comes as the group prepares for its annual general meeting on Friday, where its major shareholder, Chimaera Capital Ltd, is attempting to get two representatives appointed to the board.
Chimaera has wanted greater shareholder representation on PharmAust’s board for some time.
Mr Owen, who is not a PharmAust shareholder, said the representatives put forward were not shareholders of the company.
He said he was representing shareholders as it was the majority of shareholders who voted in favour of retaining him as a director at a recent extraordinary meeting, where a motion was brought forward by a group of dissident shareholders to oust the board.
Aside from the legal distractions, Mr Owen said the company was working hard to turn around its performance and flagged a shift away from generic drug making to an increase in manufacturing pharmaceuticals for third parties.
Last week, the company’s manufacturing subsidiary secured a $1 million contract, its largest-ever single order, to supply natural sunscreen products for skin care producer, Natural Instinct.
“The business is turning around,” Mr Owen said.
He said it would still work in the generic drug market but it was difficult to generate revenue without distribution channels in place.
Dr D’Sylva could not be contacted for comment.