Terry Quinn and Gary Stokes, of Padbury Mining, face legal action by ASIC over announcements the company made last year concerning funding for the Oakajee port and rail project. Picture: Michael O'Brien/The West Australian.
UPDATE 2.10pm: Two directors of Padbury Mining are facing legal action over the company’s handling of a $6 billion funding announcement concerning the Oakajee port and rail project.
The Australian Securities and Investment Commission (ASIC) announced today it had started civil proceedings in the Federal Court against Padbury’s managing director Gary Stokes and chairman Terence Quinn.
The action relates to Padbury’s announcement on April 11 last year that it had secured $6 million in funding from unnamed parties to develop the Oakajee port and rail project in the State’s Mid-West.
The announcement sparked a surge in the company’s share price before questions were asked by ASIC and the ASX about the identities of the mystery backers.
The mystery backers were later revealed to be companies associated with Sydney businessman Roland Frank Bleyer.
Padbury announced later in April that the funding agreement had been terminated by the parties.
Shares in Padbury plunged in response to that announcement, leaving many investors out of pocket.
ASIC will allege that Padbury’s original announcement was misleading because the funding agreement was subject to conditions precedent which had not yet been met.
The conditions required Padbury to procure some $1.3 billion in demand guarantees in three tranches.
ASIC will allege the company breached its continuous disclosure obligations by failing to disclose the conditions and by failing to disclose the identity of the backers. ASIC also claims Padbury had not independently verified the capacity of those backers to provide the funds.
The watchdog will allege the two directors breached their duty of care and diligence and engaged in false or misleading conduct.
ASIC said it would seek financial penalties against Mr Stokes and Mr Quinn as well as orders banning them from managing companies.
The case is listed for a directions hearing in the Federal Court in Perth on July 15.
Padbury’s shares remain suspended from trading after the company requested a voluntary suspension in December last year.
They last changed hands for 0.7 cents.
FAS Price at posting:
0.4¢ Sentiment: Sell Disclosure: Not Held
