Leo Shanahan
Reporter
Sydney https://plus.google.com/101002780902845862590
Seven Group managing director and former Nexus chairman Don Voelte. Source: News Limited LIBERAL Party president Richard Alston and a group of high-profile investors including legendary corporate raider Ron Brierley have joined the legal battle against the Kerry Stokes-controlled Seven Group Holdings’ $180 million takeover of failed miner Nexus Energy.
In an escalation of the resistance against the purchase of Nexus by Seven, Seven Group managing director and former Nexus chairman Don Voelte is the focus of a shareholder campaign against the takeover, with submissions to Australian Securities Investments Commission outlining serious concerns about Mr Voelte’s dual roles in the lead-up to the takeover bid.
A group of larger shareholders, representing just over 22 per cent of the company stock, have joined in the legal action objecting to the takeover. The group includes former senator and Liberal Party president Richard Alston; Mr Brierley; Azure Capital chairman John Poynton; Andrew Greig of Betchel Corporation; Karoon Gas chairman Bob Hosking; and the managing director of the Victor Smorgon Group, Peter Edwards.
The Nexus Energy buyout forms a major part of Seven’s and Kerry Stokes’s expanding investment in the resources sector.
The offer by Seven Group will see shareholders get nothing for their shares, after they rejected a 2c per share offer by Seven in June after it purchased Nexus’s senior debt. Shareholders rejected the offer because the company’s share price was at 7.7c at the time Mr Voelte stepped down from Nexus, just six weeks before the Seven offer was made. Following that rejection, Nexus went into administration.
Seven then made another $180m offer for Nexus that would pay out creditors and employees but leave shareholders empty-handed.
The offer was approved by creditors in August but remains vehemently opposed by shareholders. It would see Seven Group get Nexus for about $80m less than the value of its liabilities and $30m less than the previous 2c offer.
The deed of company arrangement still needs to be approved by ASIC, and yesterday lawyers for administrators McGrath Nicole, ASIC and shareholders appeared in the NSW Supreme Court.
A new 255-page independent report on the bid, prepared by Lonergan Edwards, was released to the ASX yesterday by administrators.
It recommends that the Seven buyout proceed.
“In our opinion, the realisable value of Nexus’ interest in the assets under a realisation scenario is likely to be significantly less than the value implied by the DOCA (deed of arrangement),” the report stated.
However, barrister Peter Brereton SC, acting for the major shareholders, said the company would be better off going into liquidation than accepting the Seven offer.
“Liquidation may provide redeemable value in the share, and may provide better value to shareholders,” he told the court.
Mr Brereton also criticised the timing of the administrators’ report, noting that it had taken six weeks to provide the report that was released on the day of the hearing, with those objecting to the takeover now only having two weeks to respond.
Meanwhile, a group of smaller shareholders known as Nexus Battle have made submissions to ASIC objecting to the bid, citing what they claim were conflicting roles of Mr Voelte in the lead-up to the offer.
In their submission to ASIC, shareholders have claimed that procedural fairness was compromised in the bid, “heavily contributing” to an adverse outcome for Nexus shareholders.
They point to Mr Voelte holding the chairmanship of Nexus Energy and Seven Group Holdings at a time takeover discussions were under way; a five-week time frame for other bidders to compile an alternative offer after the initial takeover rejection; and the signing of a gas sales agreement with Santos by Mr Voelte — which they claim had the effect of making the Longtom gas facility less attractive to buyers.
A spokesman for Mr Voelte and Seven yesterday referred The Weekend Australianto findings in an earlier administrators’ report that Mr Voelte acted appropriately in excusing himself from negotiations for the sale of Nexus.
“Arrangements were put in place to appropriately protect NEL from any conflict of interest issues that may have flowed from Mr Voelte’s position as former chairman of NEL and director of SGH,” it stated.
Sean Wilson of Nexus Battle said he was extremely concerned “whether the deal is legal”.
“Fundamentally your fiduciary role is to guide and manage a business as non-executive chairman,” Mr Wilson said.
“If that business is put in a bear hug and bought for less than a tenth of its value by a company you’re managing director of, have you fulfilled your duty?” Additional reporting: Matt Chambers
NXS Price at posting:
1.3¢ Sentiment: None Disclosure: Not Held
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