octaviar directors face 80mill class action

This appeared in today's GC Bulletin:

Octaviar directors face $80m class action for losses

by Nick Nichols

August 23rd, 2008

A CLASS action against former directors of embattled Gold Coast company Octaviar is seeking $80 million in damages, and counting.

Octaviar, formerly known as MFS, yesterday revealed it had received notification from Maurice Blackburn Lawyers of a possible action.

The legal firm is being backed by litigation funder IMF and has said it is acting on behalf of Octaviar shareholders.

The basis of the action is that shareholders should have been told the company needed about $500 million to continue as a going concern.

This was the sum sought from a capital-raising that was announced via a teleconference by former chief executive Michael King on January 18.

The announcement caused a 70 per cent drop in the company's shares the same day and the shares have been suspended ever since.

"The claims of their clients are said to total $80 million," said Octaviar in a statement to the stock exchange of the legal action.

"It is said that this amount could increase if more shareholders seek to participate in any claim."

Meanwhile, Octaviar said it had received more than 90 per cent acceptances from its listed noteholders for its payout offer, which would see all noteholders with $5000 or less invested paid out in full and the rest paid out at about 22.5c in the dollar.

It does not indicate how much of the total needed is represented by these acceptances.

Octaviar, which owes noteholders $351 million, needs the support of at least 75 per cent of noteholders by value to proceed with the payout offer. Larger noteholders have yet to respond.

It said discussions were in train with unsecured noteholders owed $100 million.

It also was set to meet officials from the Australian Taxation Office over a $53 million debt, it said.