The directors and shareholders of oil and mineral explorer Cityview Corporation are at loggerheads over what some investors are calling "dirty tricks". Perth-based Cityview, which touts exploration interests in Angola, Cameroon and Indonesia, has seen its shares tank from 36 cents in late 2007 to less than a cent a year later. While the global financial crisis is being blamed, the real reason is a complete loss of faith in the actions and integrity of Cityview's board, a group of disgruntled shareholders claim.
The group, which refers to itself as "the collective" is run by small shareholders Steve Coughlan and Sue Turner. The group came together after a number of investors started posting to sharemarket forum Hot Copper and now the run their own website.
The collective claims that mum and dad investors who were convinced Cityview was their path to riches have lost hundreds of thousands of dollars each. Managing director Mark Smyth however dismisses the collective's claims as defamatory rumours.
"The scramble for resource rights in Angola is intense," Smyth wrote in an e-mail that has now been posted to Hot Copper. "This task is made doubly difficult by the internet chatterers who follow like sheep every scurrilous rumour spread about our security of title. The continuous negative comments from the chatterers are the primary reason why the Cityview share price remains at the current low level."
Smyth said over the phone that these Internet chatters have been making the same claims for months. "We had this whole furphy six months ago and that had all been put to bed I thought."
"I can't waste my time commenting on the Internet. At the end of the day what matters is you do your work, the auditors come in and sign off and you move on."
Smyth also suggests that there may be more sinister motives afoot. "I've realised over time that we have a lot of opposition in Angola. We're probably now the biggest land-owner, there's a huge amount of competition out there are some of these Canadians are absolutely ruthless. They've discovered that all you need to do is create a rumour on Hot Copper and create a bushfire. I won't mention names but there's one particular guy and he's first class and he's ruthless. It's just like chucking a hand grenade in."
But at the core of the issue, claims the collective, is that Smyth and his co-directors, which include the former Angolan minister for mines as chairman, are making promises they can't keep and are now making moves to fire sale the company to a small group of preferred investors.
Coughlan says that several "bizarre" share placements have been made to a group of people associated with London-based Global Investment Strategy (UK) Ltd. Similar tricks have allegedly been used to silence dissent. "Due to a loophole in ASX listing rules the company has found a way to issue new shares at their discretion," Coughlan says, "enough to double the outstanding share issue and potentially defeat all votes by placing shares with friendly parties."
Coughlan says this is a David versus Goliath battle. "In essence it is about small shareholders fighting back." Yet the outcomes rests on whether the dissidents can muster enough votes for the Extraordinary General Meeting January 30, or whether ASIC rides to the rescue.
"If we can succeed it will set a new precedent, it will put dodgy directors on notice that they can be held accountable by shareholders," says Coughlan. "If we are publicly defeated it will strengthen the perception that the little guys can't fight back against corporate heavyweights."
Global Investment Strategy's shareholders and directors are John William Gunn and Ian Hugh Van Stratum. Gunn and Van Stratum are respectively in charge of Saphi Asset Management and Pinnacle Capital Management, two other companies Cityview has been doing deals with. The CVI Shareholders website says that Cityview's board is effectively giving away the company to this group of London merchant bankers.
Then again, it is also suggested – whether by cutthroat Canadian entrepreneurs or legitimate sources -- that Cityview doesn't even legally hold some of the mineral concessions in Africa it claims. If so, what exactly is there to give away?
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CVI Price at posting:
2.3¢ Sentiment: None Disclosure: Not Held
