not looking good for stp - read on!

Interests associated with Peter Gunn, one of the richest men in the state, were looking to put up to $25 million into SteriCorp just over one year ago.

Details of the proposal have surfaced in an amended statement of claim filed with the Supreme Court by Blake Dawson Waldron, acting for a Gunn company known as PGA (Equities) Pty Ltd.

The Gunn interests - which have big stakes in Toll Holdings and Mayne group - are suing the listed SteriCorp for $500,000 damages for breach of contract.

The claim, over the name of m'learned friend Pat Zappia, stated that during the last two months of 2003, PGA carried out a due diligence investigation into SteriCorp.

It alleged that SteriCorp breached an agreement in that it did not provide all necessary support, information and co-operation to enable PGA to complete the due diligence in a timely manner and to the reasonable satisfaction of PGA and its co-investors.

PGA claimed that SteriCorp agreed to pay it $500,000 if SteriCorp breached an agreement, which included a provision relating to any information that could have an adverse effect on SteriCorp's shares.

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AdvertisementPGA claimed it discovered information that could have had a materially adverse effect on the value of SteriCorp's shares, which was not disclosed by SteriCorp before November 11, 2003 - the date PGA and SteriCorp entered into an agreement to pursue an indicative proposal for PGA to subscribe for $20 million of SteriCorp shares and to underwrite a further $5 million worth of stock.

PGA said it discovered that the book values of SteriCorp's medical waste disposal facility in Canberra, the value of an Argentinian investment, and goodwill were overstated and needed to be substantially written down.

PGA also claimed it discovered that SteriCorp was in breach of its loan covenants to National Australia Bank and the US-owned Stericycle.

PGA claimed that after November 11, SteriCorp provided a budget for the following financial year that did not take into account such things as the asset values that needed to be substantially written down.

PGA said it had spent third-party costs of more than $500,000, that SteriCorp was liable to pay the costs and that it had failed to pay them.

Commenting on the litigation in November, SteriCorp chairman Barry Catchlove said: "SteriCorp denies it is liable to PGA for the amount claimed, or any other amount, and intends to vigorously defend the action."

SteriCorp scrip closed yesterday at 4 ¢, valuing the medical waste disposal outfit at slightly less than $5 million.