Investigations into Padbury Mining's Oakajee deal as shareholders angry over misled information
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It was short lived excitement over the Oakajee Port and Rail after mining company Padbury Mining announced they had secured funding for the project earlier this year.
But in a report on Australian Mining yesterday, an action will be launched by investors who purchased shares in Padbury Mining after the $6billion Oakajee Rail and Port project deal was announced but subsequently fell through.
After the deal was announced in April this year, Padbury Mining's shares rose a staggering 170 per cent with approximately 200 million shares exchanged.
But after the deal fell through, "Padbury admitted it had not secured 100 per cent of the funding required, share prices plummeted 85 per cent to 0.7 cents," the Australian Mining reported.
Here's what the article had to say:
One Padbury shareholder told The Australian he had signed up 50 investors angry at the company for misleading the market.
He said investor losses range from $5000 to $80,000.
“It’s not just about the money, it’s about the reputation of the market which is being manipulated day in and day out,” the man said.
“Someone’s head needs go on the chopping block over this.”
Melbourne law firm Lander & Rogers said it is in talks with a group of investors who are looking into bringing a class action against the directors of Padbury.
Padbury Mining first announced it had backing for the Oakajee project on April 11 but soon went into a trading halt as questions were raised about the conditions of the $6 billion funding deal.
The project was dogged by speculation it would not go ahead when the mystery backer was revealed to be Sydney businessman Roland Bleyer.
Padbury promised the market on several occasions it would reveal the funding details of the deal struck up with Bleyer’s companies including details of any shareholder approvals required and details of any security Padbury was required to front up to obtain the money.
On May 1, the company revealed the deal had been abolished.
The next day Padbury answered a number of questions put to it by the ASX and the Australian Securities & Investments Commission over the botched deal.
The company said it should have told investors that it was required to obtain a bank issue demand guarantee for 20 per cent of the $6.5bn funding package to build Oakajee.
It also said the initial announcement was not reviewed by an external legal counsel and that the company only had 40 days to come up with the bank guarantee of 20 per cent, an aspect of the deal not revealed to investors.
Padbury said it had been in talks with a number of parties relating to the conditions of the agreement and said there was “reasonable prospect” of securing a guarantee.
ASIC investigations are continuing.
References:
http://www.miningaustralia.com.au/news/padbury-shareholders-to-launch-class-action
