Keybridge hits Wilson with lawsuit, Catalano offers to buy shares back at a premium
3 June 2020, Written by David Simmons
Investment firm Keybridge Capital (ASX: KBC), led by notorious corporate raider Nicholas Bolton, has launched legal proceedings against investor advocate group Wilson Asset Management Active (ASX: WAA) alleging the latter improperly acquired 16 million Keybridge shares.
Keybridge's case is that WAM, led by founder Geoff Wilson, improperly transferred 16,057,929 Keybridge shares (representing approximately 12 per cent of the total shares in Keybridge) from 96 shareholders into WAM Active's name on 6 March 2020.
But because of a Takeovers Panel decision handed down in April declaring WAM's takeover bid closed on 3 March, Keybridge alleges all takeover contracts and acceptances in relation to that bid then became void and no transfers should have been registered.
Keybridge's lawsuit is the latest move in what has shaped up to be a complex game of corporate chess, with players like Geoff Wilson and Farooq Khan-led Bentley Capital (ASX: BEL) all vying for control of the investment firm.
Keybridge is looking to rely on section 650G of the Corporations Act and hopes to receive a declaration from the Supreme Court that a defeating condition of the takeover offer was not fulfilled, thus making the transfer of the 16 million shares void.
To resolve this issue, Keybride is looking to have these 16 million shares vested with the Australian Securities and Investment Commission for sale, and that WAM pay Keybridge's legal costs.
In the wake of this lawsuit recently appointed company director Antony Catalano has stepped up and has announced that he will buy these shares back from the 96 shareholders in question at a slight premium of $0.07 cash per share, up from $0.069 per share those shareholders were attempting to achieve by selling into WAM's allegedly void bid.
If Catalano acquires every share available to him he would increase his shareholding in the company from 10.25 per cent to 22 per cent.
"Keybridge notes that these impacted shareholders may request the return of their shares from WAM Active at any time, pursuant to orders of the Takeovers Panel, and are free to sell their shares for a higher consideration if they so choose," says Keybridge.
The lawsuit is underscored by WAM's latest bid to takeover Keybridge and its calls for the Keybridge board to be spilled.
In late April WAM launched yet another bid at taking over the Nicholas Bolton-led Keybridge Capital at 6.9 cents per share, representing a premium of 29 per cent at the time it was launched.
Wilson's repeated case to Keybridge investors is simple; the fund claims Keybridge is bad news for shareholders: its net tangible asset (NTA) backing has fallen 70 per cent since the end of 2016 and the company is prone to significant corporate governance issues.
WAM also recently posted a notice of intention to remove a number of Keybridge's directors and appoint its own leadership in their place.
The company says it wants to elect WAM's founder Geoff Wilson alongside Jesse Hamilton and Martyn McCathie as directors of the Keybridge board. WAM has also called for the removal of Antony Catalano, Nicholas Bolton, Jeremy Kriewaldt and anyone else that may be appointed to the board between May 5 and the date of the general meeting.
Meanwhile Keybridge is in the midst of plotting its own coup against Australian listed chocolatier Yowie (ASX: YOW).
Bolton's Keybridge made its intentions clear back in April, but the real showdown will commence on 24 June when Yowie holds its AGM and shareholders are given the opportunity to vote on instating Keybridge CEO Bolton and John Patton in the places of Yowie chairman Louis Carroll and Neville Basset.
The last time Keybridge attempted a coup of the chocolatier it was unsuccessful, with two-thirds of Yowie shareholders voting against the removal of Carroll from the board.
Keybridge investment in Australian Community Media incomplete one year on
Late yesterday afternoon Keybridge posted yet another announcement to the ASX, this time concerning its $5 million investment that has been subject to incomplete negotiations.
According to Keybridge, on 28 June 2019 the company subscribed for $5 million units in the Australian Media Holdings Unit Trust. This Unit Trust was established by Keybridge at the same time, with Keybridge acting as the sole unit holder and beneficiary of the trust.
Two days later, Keybridge says Kirant Regional Media (a trustee of the Unit Trust) completed an acquisition of a 16.67 per cent interest in Australian Community Media ('ACM'). Readers may recognise ACM as Antony Catalano's regional media publishing company, acquired from Nine Entertainment Co (ASX: NEC) for $115 million in April 2019.
This stake in ACM was acquired in consideration of payment of $5 million to the vendor of the business, at the time being Nine.
However, nearly one year on, Keybridge says Kirant, whose sole director is none other than Antony Catalano, has not yet vested the 16.67 per cent shareholding to the Unit Trust.
"That is, whilst the Trustee is the registered holder of a 16.67 per cent shareholding in the Investee Company (ACM), it has not acknowledged that it holds this shareholding as a Trustee of the Unit Trust as that was not included in the original agreement for the deposit," says Keybridge.
Keybridge says in July Kirant advised the vesting of the shares in satisfaction for the money forwarded is dependent on the consent or agreement of the other shareholders of ACM and further that if their consent is not forthcoming Kirant has undertaken to transfer $5 million cash into the Unit Trust in lieu of the 16.67 per cent equity interest in ACM.
Keybridge says it is working with Antony Catalano to find a mutually acceptable position with the shareholders of ACM.
Catalano has since entered into a Deed of Guarantee and Indemnity to irrevocably guarantee to Keybridge the payment of any monies payable by Kirant and the repayment of any monies advanced to Kirant by Keybridge (including the $5 million subscription).
Business News Australia
Author: David Simmons