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3.1¢ morella corporation limited

Will keep you informed SJlasx Firstly as a disclaimer I am not...

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tdog1865

21 Posts.

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22/11/20

20:35

Post #: 49053557
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Will keep you informed SJlasx

Firstly as a disclaimer I am not saying there has been any inappropriate actions by AS, however any member has the right to complain under the corporations act

As you are aware, the corps act deals with regulated complaints through the IDR and EDR process

It also governs boards and conflicts of interest

To give you an overview of an EDR complaints process
AFCA will have much more governance oversight and breadth when investigating an EDR complaint process and often liaise with ASIC if they find a breach of the corporations act has taken place.

For me personally the money is lost, however, I, like many others want to make sure organisations follow their fiduciary duty and obligations as an AFSL holder under the corps act which gives the individual the right to make a complaint if they feel they have been disadvantaged in any shape or form

I am merely exercising my right

Originally posted by Sjlasx ↑

I am curious to learn the outcome of your attempt.

Your posting history doesn't leave me considering you a financially illiterate, naive investor that had not considered AJM's potential to default.

I assume you were aware of the multiple approved requests to capitalize interest payments that couldn't be met, the rolling requests for various covenant waivers - one of which did not appear as paid in the June 2020 Qtr 5b when it fell due - , the Fitch Ratings CCC+ rating indicating the vulnerability of the company to meet it's debt commitments, and the regular very low levels of working capital reported each quarter.

Am I correct to assume that you are positing noteholders would have accepted the apparent "close enough will be good enough" proposal from the AJM BOD, if Australian Super had not agreed to participate in a CR to PLS to enable a binding offer to noteholders in the event that they enforced their rights to call in Receivers to recover the debt from the secured assets?

While some suggest AJM could have got their proposal finalised in the few days remaining before the end of the month, it did not appear to offer a complete payout to noteholders and would have been contingent on FIRB, and shareholder approval at an EGM based on the participants and scale of recapitalisation covered in various media reports.
This could have required noteholders to allow additonal weeks or even months to reach an outcome that may not have met the criteria set for the Oct 31st deadline.

I get it is a shock to see how rapidly they have moved given their history of leniency with AJM including the recent couple of months they gave AJM to find a solution, but put yourselves in their shoes and consider they were presented with a fast, sure fire way to exit an arrangement thay they themselves considered too risky even for their distressed debt business models.

I would note that if a solution had been found by Oct 31st that provided access to funds by that date to pay out noteholders in full, AJM would not be in this current situation.

My view is that a BOD with a known affinity for extreme risk assumed noteholders would not have a satisfactory offer waiting or be willing to take their chances with the appointment of Receivers that may not have eventuated in a full return. The last in a long line of gambles didn't pay off.

While Australian Super helped PLS assemble the funds to make an offer, it did not make AJM default - they did that all on their own. AJM and the secured creditors were well down the road of attempting to resolve the major looming defaults along with minor unresolved breaches. It is also possible AJM were at the point of trading insolvent.

What Australian Super, lead by RCF may have done is reduce AJMs ability to drag out the matter in line with their history of hoping a solution will present itself if they can just hold on.

I presume when AJM updated the noteholders of their late stage recap plans and the need for additional time and potential financial concessions, the Receivers were appointed as it was clear the BOD could not resolve the issue in a satisfactory manner by the deadline.

Little has been mentioned of RCF however it seems apparent that due to the high level of execution facilitated through a well formulated plan that seems to have covered every possible contingency, they were the driving force and brains behind the endeavour. I would posit that nothing was left unplanned and find it likely that if Australian Super wasn't onboard, a replacement would have been ready.

What AS has done however is pick up on an opportunity to act in the best interests of the majority of their members by attempting to participate in a lucrative deal that may well offset some of the losses faced by the "member direct" product users who themselves chose to invest in AJM and to hold onto that investment even after it fell out of the asx300 criteria for purchases in September last year.

Believe it or not but it could be seen as in the best interest of the few remaining "member direct" long term AJM holders if a replacement PLS equity raise participant was inevitable - it is possible AS was one of several interested institutions and happened to be the one selected alongside the deal facilitator RCF.
If that is the case then choosing not to participate in the PLS CR would not have altered the outcome.

Fortunately it appears Australian Super looks out for it's members with a high appetite for risk by restricting holdings to no more than 20% of a portfolio in a single company and other "safety" features of the service.

It is the nature though of SMSF that participants can only be protected so far from their own poor investment decisions. Perhaps Australian Super should make determinations as to when to intervene as part of their fiduciary duty and divest members holdings from companies that have fallen outside the investment criteria and represent far to great of a risk. I understand that many would be highly outraged to see this happen, but put that in perspective of those that are complaining they weren't well enough protected.

Australian Super will also be helping to ensure that the asset remains for the most part in Australian hands, and of key importance not another Australian Spodumene asset that is effectively price controlled by offtakers that have demonstrated they are quite willing to beg these companies for low pricing to ensure their own survival while acutely aware AJM in this instance was in more distress than themselves.

Major holder ShanShan already signed a sweatheart offtake deal determined "unfair" in an independent report. It would strike me as odd for Ganfeng to invest and not demand superior terms to ShanShan during their contract extension renegotiation.

Back to your formal complaint with Australian Super, what would be a satisfactory outcome to the dispute resolution process for you?

It seems by your post that you have determined that regardless of the outcome of the IDR you will proceed to EDR and no doubt any other further avenues.

Does this mean you understand that whatever you are willing to accept cannot be feasibly achieved internally or is it a case of taking it as far up the chain as possible to mollify yourself?

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AJM Price at posting: 7.0¢ Sentiment: Hold Disclosure: Held
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