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8.2¢ alita resources limited

I wonder what "contingently indebted" to the ATO means?.Does...

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19/12/23

17:59

Post #: 71533007
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Originally posted by sabine: ↑

https://www.theaustralian.com.au/bu...a/news-story/b1742dc0838f3fe6b3f9126beded9744

Ellison in court to give McGrath Nicol the boot on Alita

Legal battle for control will see Mineral Resources boss Chris Ellison in court.

By TANSY HARCOURT
SENIOR REPORTER
11:29AM DECEMBER 19, 2023
Mineral Resources, the lithium giant controlled by Chris Ellison, will be in court on Tuesday trying to kick out the liquidators for lithium miner Alita Resources, McGrath Nicol, and install new board members including Mr Ellison at the company it now controls 9.9 per cent of.

The matter will be heard in the Supreme Court of Western Australia, with MinRes arguing the liquidators for Alita Resources were redundant because of the amount of cash the Western Australia-based company has in the bank.

“Alita Resources has circa $100 million in cash. There is no longer a need for liquidators who are charging significant fees for their services,” said a MinRes spokesman. “The affairs of the company can be managed by a newly constituted board.”

Through a series of structures, Alita had Australia’s only in-production lithium mines, Bald Hill.
It fell into administration in 2019 when prices for the commodity slumped, and since then McGrath Nicol – while acting as administrators – had been in protracted arrangements to sell the company to a China-connected company which it installed to run its Bald Hill mine and which subsequently sold its lithium at dramatically below market rates.
That bid by the China-connected company Austroid Holdings (and an earlier one by related company CHEL) was knocked back by the Foreign Investment Review Board, and subsequently McGrath Nicol sold a stake in Alita to MinRes.

Lithium is a key commodity needed for the electrification of the world and a component in batteries for electric vehicles (EV), mobile phones, and solar power backup storage.
As more countries have signed up for net zero targets, prices for lithium have tripled over four years but have fallen this past year on fears of a slowdown in EV sales in China.

Mineral Resources boss Chris Ellison. Picture: Supplied

McGrath Nicol has said it was taken by surprise by MinRes’s attempt to remove it and said in a statement to Alita shareholders that the dual listed entity – listed in both Australia and Singapore – was still in debt.
McGrath Nicol said companies associated with Alita owed the Australian Taxation Office about $203m.
That could potentially make the ATO the biggest creditor in Alita, ahead of Austroid.

“The Liquidators received a letter enclosing a formal proof of debt from the ATO in the amount $203,045,626.28 which states that Alita still is, justly, truly and contingently indebted to the Deputy Commissioner of Taxation for Income Tax,” said McGrath Nicol in a statement. “Tax consultants have been engaged to prepare and finalise the Alita Group’s income tax returns for FY23 and FY24. The FY24 tax returns will also include an assessment of the tax payable following the sale of Alita’s shares in Tawana,” said McGrath Nicol.
Alita was delisted from the ASX, but its shares remain on hold in Singapore.

A MinRes spokesman said its proposed move would allow shareholders – including in the ASX-listed entity, to “vote on the directors and have a say on the future affairs of the company”.
“MinRes supports control reverting to a newly constituted board of directors who have been approved by shareholders and who will be accountable to the shareholders,” the spokesman said.

McGrath Nicol has previously come under scrutiny for not opening the books of Alita to other potential bidders and instead selling Bald Hill to MinRes for about $270m plus the 9.9 per cent shareholding in Alita.
As the Australian revealed earlier this year, Glencore and Sagex Capital had offered to buy the company’s debt and relist it for as much as $1.8bn.

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I wonder what "contingently indebted" to the ATO means?.

Does that mean Alita is only liable if the subsidiaries don't pay the tax? Obviously with MIN now controlling the subsidiaries it's not likely that they won't pay any tax due by the subsidiaries.

Even MCGrath seem to think it's associated companies that owe the tax.

"McGrath Nicol said companies associated with Alita owed the Australian Taxation Office about $203m."
A40 Price at posting: 8.2¢ Sentiment: None Disclosure: Held
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