ELECTROMETALS HIT BY LEGAL ACTION
Written on the 18 August 2014 by Nick Nichols
LISTED Gold Coast company Electrometals is facing another hurdle to its ongoing battle for survival after a court application was filed to set aside the deed of company arrangement (DOCA) through which it currently operates.
Ina brief statement to the Australian Securities Exchange, Electrometals says it could be placed into liquidation if the court rules in favour of the DOCA being set aside.
Electrometals gives no further detail of the court action.
Deed administrators Andrew Fielding and Matthew Joiner, of BDO, have not responded to requests for comment from Gold Coast Business News.
Court records show that a Supreme Court action against the company was filed on August 11 by two parties, the Victorian-registered Traivelog Pty Ltd and NSW-registered piping systems company George Fischer Pty Ltd.
Electrometals secured a DOCA on April 2 following a second creditors’ meeting that voted in favour of unsecured creditors receiving 6c in the dollar for their debts. Unsecured creditors are owed $815,000.
The DOCA has been extended three times in the past three months, with the latest taking it to the end of September.
In June, Electrometals scored a court victory in the US where it defended a lawsuit for breach of contract in Missouri.
A week earlier, Electrometals announced it had received an outstanding debt owed to it by a Middle East customer, with those funds applied to company debts.
The company failed to identify how much it received in that payment.
However, a report to creditors in March detailed the reason for the company’s current financial position was a bad debt totalling $1.12 million owed by a party in Iran.
Electrometals had been pursuing the debt since November 2012.
The latest court action leaves the company’s future in the balance.
Electrometals, which has been listed on the stock exchange since 1989, sells patented minerals extraction systems to the resources sector.
The company has clients across the world and has established subsidiaries in the US and Canada, where CEO Ian Ewart is based.
A spokesman approached by Gold Coast Business News at the company’s latest registered address at Mudgeeraba says he cannot comment on the company’s affairs.
Electrometals has struggled to return a profit over the past 25 years, although the creditors’ report revealed that calendar 2013 produced stronger than normal revenue of $4.3 million.
Electrometals’ most recent earnings result, in the half year to June, delivered a $409,000 loss and half-year sales of $1.75 million, up 58 per cent from a year earlier.
Author: Nick Nichols