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Metgasco's latest crisis: Director ousted foralleged breach of duties
By Stephen Long
Updated 19 Apr 2018, 4:49pm
PHOTO: Andrew Purcell, a former director ofMetgasco. (Stephen Long)
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When Andrew Purcell is asked how serious a breach of directors' dutiesit would be for a director to seek a secret, personal benefit in return forsupporting a deal in the interest of shareholders, he answers with a vigorousnod.
"That would be against directors' duties, yes," he agrees.
That conduct is precisely what Mr Purcell, who this week was voted offthe board of the ASX-listed oil and gas venture Metgasco, has been accused ofby the chairman of the company which ousted him — an allegation he flatlydenies.
Behind the accusation is the failure of a planned merger betweenMetgasco and another small oil and gas company, Byron Energy.
Fellow directors were shocked when Mr Purcell did an about-face afterinitially backing the merger, which would have delivered enormous value forMetgasco shareholders.
The shock turned to outrage, said Metgasco chairman Alex Lang, when theboard was told Mr Purcell had approached Byron Energy, in breach of boardprotocols, with an ultimatum.
Expectation ofbeing appointed CEO
"The CEO of the target company [Byron] disclosed, or reported tome, that Purcell was seeking a very personal benefit in return for hissupport," Mr Lang told the ABC.
"Andrew Purcell expressed towards the chief executive of ByronEnergy that he expected to be made CEO of the merged entity, when the mergerwas successful, in return for his support for the deal on the Metgascoboard."
When the ABC put the allegation to him, Mr Purcell responded: "Isaid no such thing."
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"We got to the point of due diligence and there's a number ofquestions I had, as if with any transaction, that should be answered," hesaid.
"Those questions had not been answered."
The proposed merger required unanimous director support to proceed andPurcell's opposition effectively scuppered the deal.
He agreed in hindsight it would have been in Metgasco shareholders' bestinterests — Byron Energy's value has since soared — but said he was acting onthe best information he had at the time.
The CEO of Byron Energy, Maynard Smith, declined to be interviewed or tomake any comment on the issue, but did not dispute Metgasco chairman Mr Lang'sversion of events.
History repeating
It's not the first time Andrew Purcell has been at the centre of aboardroom battle.
When fellow directors succeeded in having him dumped from the Metgascoboard this week, it was the third time in recent years he had either resignedamid controversy or been evicted from a company board.
Mr Purcell maintains he is a stalwart champion of all shareholders inthe companies he is or has been a director of and brings to those businessesextensive experience in the oil and gas industry, as well as investmentbanking.
"I have many investors and many shareholders across all thecompanies I sit on the boards of," he said.
"I look after each of them as if they were my only one and I lookafter all shareholders the same way."
But others dispute this.
Directors at some companies Mr Purcell's been involved with have toldthe ABC of their unease about transactions he's brought to the table or dealsthat might potentially benefit associates.
Some of the concerns relate to his relationship with the Twinkle Group:a network of companies apparently controlled by Malaysian interests via anopaque structure that flows through the British Virgin Islands.
In early 2013, after a board spill, Mr Purcell became a director ofCougar Energy, later renamed Moreton Resources, an ASX-listed company based inBrisbane with coal assets in Queensland.
Jason Elks, who is now the executive chairman of Moreton Resources, ownedmore than 5 per cent of the company's shares at the time.
He was initially impressed by Mr Purcell's pitch.
"Cougar had quite significant coal assets that were under-utilisedand undervalued," Mr Elks said.
"The mandate was that they were going to advance the coal assets.
"I was looking to him, being a coal expert, to advance thecompany."
But he soon became disillusioned.
Driven to nearinsolvency
"It was very odd. What they did was started to downgrade the coalassets.
"I was concerned that they were far more valuable than they weremaking out.
"Over six months [they] managed to pretty much destroy theintrinsic value on the share market so the price dropped significantly."
Within months, the board reckoned the company was near insolvency.
Andrew Purcell came up with a solution: he introduced Twinkle WoodsLimited as a source of funding.
Moreton struck a deal that offered Twinkle Woods Limited effectivecontrol of the company — a stake of at least 35.5 per cent through shares andconvertible notes — in return for a $1 million loan.
Jason Elks was alarmed; he saw this as a virtual giveaway.
"They purported that the company was in dire straits when we hadreceivables of $8-10 million."
"They would have had …under their control tens of millions of dollars of coal assets, they would havehad accounts and receivables due to them of somewhere between $8-10 million incash, all for the princely sum of $1 million."
Kind regards OldGeo
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