Wilson slams Catalano's "opportune" Keybridge share buy-back offer

5 June 2020, Written by David Simmons

Wilson slams Catalano's "opportune" Keybridge share buy-back offer

Investor advocate group Wilson Asset Management Active (ASX: WAM) has come out swinging against Anthony Catalano and Keybridge Capital (ASX: KBC) after being served with a lawsuit on Monday.

Earlier this week Keybridge, led by corporate raider Nicholas Bolton, commenced legal proceedings against WAM alleging the latter improperly acquired 16 million shares.

It was the latest play from Bolton in a long-running game of tug of war, with WAM founder Geoff Wilson vying for control alongside Farooq Khan-led Bently Capital (ASX: BEL) and Aurora Funds Management.

Today, WAM says while it is still assessing Keybridge's allegations it is concerned about Catalano's unsolicited offer to acquire the 16 million shares for seven cents a pop.

"Mr Catalano's unsolicited offer contains inadequate information regarding the value of KBC, which he is uniquely placed to provide," says WAM.

"WAM Active observes that, if Mr Catalano were to make a bid for the benefit of all KBC shareholders, an independent expert report would be required."

WAM seems relatively unfazed by Keybridge's latest attempt to regain some control of the company via the lawsuit, citing Keybridge's two previous attempts to obtain orders of this kind; the Takeovers Panel has twice refused to make the orders Keybridge is requesting.

The Geoff Wilson-led firm says it intends to seek cost orders against Keybridge in relation to the proceedings.

Further, WAM is critical of Keybridge using its limited cash to launch a costly lawsuit, especially considering Keybridge's failure to disclose delays to its investment in Catalano's Australian Community Media until almost a year after the investment was announced.

"On 2 June 2020, KBC made an announcement regarding the proposed $5 million investment in Australian Community Media, which KBC paid for in June 2019, but is still yet to complete," says WAM.

"WAM Active notes that it has taken almost 12 months for KBC to disclose this investment to shareholders, despite it representing approximately 50 per cent of KBC's current NTA.

KBC shareholders have now only been notified of the related party nature of the transaction with Mr Catalano, a material shareholder and current Director of KBC."

The above developments are all underscored by WAM's latest attempt to takeover Keybridge, launched in late April at 6.9 cents per share.

WAM also recently posted a notice of intention to remove a number of Keybridge's directors and appoint its own leadership in their place.

Bentley's broker bungle causing headaches

The multiple takeover bids for Keybridge are so confusing that even the brokers managing them are seemingly missing the mark.

Yesterday afternoon Farooq Khan-led Bentley Capital released a statement regarding its bungled investment in Keybridge.

The company says its broker made an administrative error in the process of accepting into the WAM takeover bid for Keybridge via CHESS and accidentally accepted into a competing bid from Aurora Dividend Income Trust.

But now Aurora is refusing to reverse the error, despite significant pressure from the Takeovers Panel to do so.

To put things in context Aurora is led by John Patton, who also happens to be the former chairman of Keybridge and a current director.

Following the broker error Aurora refused to correct the administrative error, forcing Bentley to apply to the Takeovers Panel seeking that its inadvertent acceptance into the Aurora bid be reversed.

In April the Takeovers Panel made a declaration of unacceptable circumstances regarding the Aurora bid and made orders to the effect that they would allow any person that accepted into the Aurora bid had the right to withdraw that acceptance.

Accordingly Bentley withdrew its inadvertent acceptance into the Aurora bid and withdrew its application to the Takeovers Panel as its point was now moot.

Despite the Takeovers Panel decision John Patton advised Bentley the following: "Aurora understands that Bentley and Scarborough wish to withdraw their respective acceptances into the ADIT bid. Having considered this matter, Aurora hereby advisesthat it declines these requests."

Understandably, Bentley is not pleased with this response.

"Bentley is unable to comprehend any sensible basis for Mr Patton's statement," says Bentley.

"It appears Mr Patton's statement has failed to understand the Takeovers Panel's Orders or is otherwise lacking in understanding of the operation of Australian corporations and contract law."

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Author: David Simmons

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