Dear Minister King
The Northern Australia Infrastructure Facility $610 million taxpayer funded Concessional Loan.
Kidston Storage Pumped Hydro project (K2H).
In 2022 I undertook extensive lobbying with you and many others, (including Minister Gallagher), to stop the transfer of a NAIF $610 million concessional loan, made for the development of the Kidston Storage Pumped Hydro project. Kim Jackson and Scott Farquhar, (of Atlassian fame), with the support of Simon Kidston, sought to benefit from the taxpayer funded loan by way of a takeover of Genex Power Ltd by their privately owned Skip Capital.
After five months, in December 2022, I finally read that the Skip Capital bid had been withdrawn.
Over a year and a half later, (on 4 March 2024), Genex Power Ltd shareholders learnt from an ASX Announcement that a NBIO had been received from a Japanese company, Electric Power Development Co,. Ltd, (J - Power). For a second time the $610 Kidston Storage Pumped Hydro concessional loan had been brought into play.
https://www.naif.gov.au/our-projects/genex-kidston-pumped-hydro-storage-project/
As you and your advisers can read, in the accompanying copy of an email to ASIC, (Witham), NAIF, (Collins) and the Takeovers Panel, (Bulman), this second time round has brought with it different issues but issues nonetheless directly arising from the NAIF loan.
Prior to the NBIO Genex Power Ltd withheld crucial information, (interest rates), about the NAIF loan, particularly about how repayment of the loan would financially impact upon the company when K2H became operational at the end of this year. That strategic withholding of information impacted on the company’s share price. Information denied Genex shareholders but given to J - Power through an employee who is on the Genex Board?
Now, over two months since the NBIO was made, I am not able to learn from NAIF’s Chief Legal Officer what is intended for the ownership of the NAIF loan if the takeover is successful. This is very disturbing, especially given NAIF’s deplorable handling of the Skip Capital takeover bid.
This failure to disclose pivotal information and the apparent efforts of ASIC, NAIF and the Takeovers Panel to avoid addressing my Report of Misconduct and arguments for the need for the Takeovers Panel involvement, (because of Unacceptable Circumstances), ought be of concern to you, as one of the two Ministers responsible for the Northern Australia Infrastructure Facility Act 2016.
I will place this letter to you on the website known as HotCopper. It seems it is one of very few avenues by which Genex retail shareholders can learn what may or may not be going on.
Has the Chairperson of NAIF, Ms Tracy Hayes, provided you with a brief on the current state of play with this takeover? A takeover involving a very substantial NAIF loan and a foreign takeover?
Yours sincerely
HLP
For the Attention of Ash.
“Gentlemen
I have had cause, because of HotCopper posts, to review the Skip Capital takeover proposal for Genex Power Ltd. It began with a non-binding bid of 23 cents per share on 23 July 2022.
On 17 August 2022 a revised non-binding indicative bid of 25 cents was received by Genex. In an ASX Announcement dated 23 September Genex stated that " the Consortium has completed its due diligence and obtained committed funding for the Proposed Scheme (as defined below), and that a scheme implementation agreement to give effect to the Proposed Scheme is expected to be entered into shortly."
In the Chairman's address to Shareholders, dated 30 November 2022, the issue of the egress of water into the MAT, (Main Access Tunnel), was raised and the following was stated:- "The Consortium are continuing to do work and engage constructively with Genex and its advisers at this time, however the Consortium has not provided the Genex Board with a binding or final proposal in respect of the Proposed Scheme."
It was not until 23 December that Genex Advised that discussions with Skip had concluded.
My purpose in bringing the above to your attention is that Genex Power Ltd were engaged with the Skip Consortium from before well 23 July to after 30 November 2022 During all this time the Northern Australia Infrastructure Facility, (NAIF), had to be aware of the discussions yet neither it, (the lender of the $610 million concessional loan from NAIF) or the recipient of the loan, Genex Power Ltd, saw fit the address the relevant part of the Act through which the loan was made. See:-
Part 3—Investment Mandate
9 Investment Mandate
Limit on Investment Mandate
(4)The Investment Mandate must not direct, or have the effect of directing, the Facility to provide financial assistance:
(a)for the development of particular infrastructure; or
(b)in relation to a particular person
On 19 August I emailed Simon Kidston and on 22 August I emailed Craig Doyle and James Harding concerning the takeover and the $610 million loan. Simon Kidston, the apparent leading protagonist within Genex for the takeover, ignored my email and Messrs Doyle and Harding, it seems, merely continued to "work constructively" with Skip until at least 30 November, 2022. Perhaps by that date the work was directed towards extricating both parties from the Kidston/Skip Capital "deal". The takeover bid should not have seen the light of day and would not have, if NAIF had diligently performed its duties? Like seeking an opinion from the Solicitor-General, as far back as July 2022.
Given what happened before, with Skip Capital Consortium takeover bid, I have given you the link to the National Anti-Corruption Commission site in which corrupt conduct is discussed:-
https://www.nacc.gov.au/reporting-and-investigating-corruption/what-corrupt-conduct
Is it acceptable for a public official in NAIF to not reveal pertinent information about the $610 million loan and for ASIC to not demand that information to enable it to competently assess the Report of Misconduct? Is it acceptable for ASIC to try to avoid making an application concerning unconscionable circumstances to the Takeovers Panel?
Now the situation is that three Commonwealth Public servants, as defined by the National Anti-Corruption Commission Act 2022, are confronted with the task of dealing with the Report of Misconduct to the Australian Securities and Investment Commission, (ASIC). Central to the Report of Misconduct is the $610 million taxpayer funded concessional loan. I say central because the Kidston/Craven/Seshimo Genex Power Ltd Board withheld crucial information about the loan and its financial impact on the headmast Kidston Storage Pumped Hydro project; K2H. K2H was scheduled to begin operation this financial year. Now, without explanation, it is the first quarter of 2025?
It is clear that the strategic withholding of information about the NAIF loan and other matters, particularly the Boulderscome Battery, had a negative effect on the Genex share price, the VWAP figures used in the offer document and the offer price from Mr Seshimo's employer, Electric Power Development Co,. Ltd, (J - Power).
There has not been an explanation from the Genex financial adviser, Goldman Sachs for the minimal increase over the Skip Capital offer price of 25 cents, despite all the physical and financial work performed and de-risking of K2H during the intervening year and a half. Goldman Sachs stood idly by through the Skip Capital bid and has apparently justified acceptance of the 27.5 bid from J - Power. Despite this it seems Genex intends appointing Goldman Sachs as "Independent Expert"?
I am waiting for responses from Mr Collins, (Government Lawyer of the Year, at the 2024 Lawyers Weekly Counsel Summit and Awards), and Mr Bulman.
For whatever it is worth I point out that this matter has drawn attention from many on the HotCopper site.
I look forward to your early response, bearing in mind, the clock is ticking on the TID.
Yours sincerely
HLP”
