October 24, 2007
The Great ConsMin Mystery Inside A Puzzle
By Our Man In Oz
It might turn out to be a case of European bank privacy bumping into Australian corporate law, but to the casual observer a surprise stock exchange filing earlier today by the takeover target, Consolidated Minerals, smacks of “dirty tricks”. According to ConsMin, which is the recipient of a series of takeover bids, it has “discovered” a mystery investor on its share register with title to a parcel of 40.6 million shares valued at a handsome A$190 million. That stake, which converts into a 17.7 per cent interest in ConsMin, is said to be registered in the name of “Euroclear Bank for ING Bank in Prague”. And that’s about as far as ConsMin’s inquiries have got, and why it’s blown the whistle and called in the corporate cops.
According to ConsMin it has been using the Australian Corporations Act to try and identify the owner (or owners) of the parcel. But after peeling away four layers of custodians in Australia and Europe the carefully constructed puzzle remains in place. If ConsMin was not the subject of competing takeover bids from high-profile investors this would not be such an important event. Investors, especially fat cat Europeans who crave privacy, routinely mask their intentions behind a corporate veil to rival Winston Churchill’s famous description of Russia being “a riddle wrapped in a mystery inside an enigma”.
ConsMin, however, is not a normal company. It has received steadily rising bids from Pallinghurst Resources, a private equity fund managed by one-time BHP Billiton boss, Brian Gilbertson, and a purpose-designed company called Palmary Group which ultimately reports to Ukrainian billionaire, Gennadiy Bogolyubov. At the last count, and only after regular court challenges and appeals to the Australian Takeovers Panel, Gilbertson and Bogolyubov where both offering A$4.50 per ConsMin share – and the market was trading at A$4.69, but has got as far as A$5.44 as recently as two weeks ago.
With deadlines for bids drawing close (thank goodness), the question of who owns what is becoming somewhat important, hence the shock element behind today’s ConsMin filing that it has an “alien” on its share register. Experts contacted by Minesite were divided as to what the ownership questions points to. It is possible that a number of investors, hiding behind the corporate veil of a European bank, have ultimate title to the shares. If each owns less than 5 per cent no harm is done. If they are acting “in concert” and speak for more than 5 per cent then they are obliged to lodge substantial shareholder notices. Failing to do so is in the misdemeanour category, perhaps leading to a flogging with a wet lettuce leaf.
The nasty possibility is that someone associated with one of the rival bidders, or one of the sidelined bidders, of which there are another two, has quietly “warehoused” a big parcel of paper, waiting to slip it across at the appropriate time. If that’s the case then Australian law becomes quite onerous. ASIC (the Australian Securities & Investments Commission has strong powers to either (a) force ownership disclosure, or (b) actually quarantine the shares, and as a last resort take possession and sell them, returning the proceeds to the last known owner – or keep the cash if no-one claims it.
A spokesman for ConsMin contacted by Minesite said the situation really was a mystery after a series of attempts to discover the owner of the parcel. “That’s why we’ve turned to ASIC,” he said. “It wouldn’t be such a big issue if we weren’t the subject of competing takeover bids. But we really need to clarify who owns what so the market can be fully informed.” In the formal statement, ConsMin said it had “referred the matter to ASIC for further investigation and action”, adding that ConsMin reserves the right to “pursue further action through the Takeovers Panel in relation to this holding”.
Given that the ConsMin saga has dragged on for a year, and everyone is thoroughly bored with the name calling, this is precisely what was needed to breath a little life into a stale situation. However, to have it delivered as a mystery shareholder, inside a private bank is really quite delicious. Plus, there’s the bonus of the chaps in grey cardigans from ASIC actually being forced to come out from behind their counters to do some work, poor darlings.
The Great ConsMin Mystery Inside A Puzzle
By Our Man In Oz
It might turn out to be a case of European bank privacy bumping into Australian corporate law, but to the casual observer a surprise stock exchange filing earlier today by the takeover target, Consolidated Minerals, smacks of “dirty tricks”. According to ConsMin, which is the recipient of a series of takeover bids, it has “discovered” a mystery investor on its share register with title to a parcel of 40.6 million shares valued at a handsome A$190 million. That stake, which converts into a 17.7 per cent interest in ConsMin, is said to be registered in the name of “Euroclear Bank for ING Bank in Prague”. And that’s about as far as ConsMin’s inquiries have got, and why it’s blown the whistle and called in the corporate cops.
According to ConsMin it has been using the Australian Corporations Act to try and identify the owner (or owners) of the parcel. But after peeling away four layers of custodians in Australia and Europe the carefully constructed puzzle remains in place. If ConsMin was not the subject of competing takeover bids from high-profile investors this would not be such an important event. Investors, especially fat cat Europeans who crave privacy, routinely mask their intentions behind a corporate veil to rival Winston Churchill’s famous description of Russia being “a riddle wrapped in a mystery inside an enigma”.
ConsMin, however, is not a normal company. It has received steadily rising bids from Pallinghurst Resources, a private equity fund managed by one-time BHP Billiton boss, Brian Gilbertson, and a purpose-designed company called Palmary Group which ultimately reports to Ukrainian billionaire, Gennadiy Bogolyubov. At the last count, and only after regular court challenges and appeals to the Australian Takeovers Panel, Gilbertson and Bogolyubov where both offering A$4.50 per ConsMin share – and the market was trading at A$4.69, but has got as far as A$5.44 as recently as two weeks ago.
With deadlines for bids drawing close (thank goodness), the question of who owns what is becoming somewhat important, hence the shock element behind today’s ConsMin filing that it has an “alien” on its share register. Experts contacted by Minesite were divided as to what the ownership questions points to. It is possible that a number of investors, hiding behind the corporate veil of a European bank, have ultimate title to the shares. If each owns less than 5 per cent no harm is done. If they are acting “in concert” and speak for more than 5 per cent then they are obliged to lodge substantial shareholder notices. Failing to do so is in the misdemeanour category, perhaps leading to a flogging with a wet lettuce leaf.
The nasty possibility is that someone associated with one of the rival bidders, or one of the sidelined bidders, of which there are another two, has quietly “warehoused” a big parcel of paper, waiting to slip it across at the appropriate time. If that’s the case then Australian law becomes quite onerous. ASIC (the Australian Securities & Investments Commission has strong powers to either (a) force ownership disclosure, or (b) actually quarantine the shares, and as a last resort take possession and sell them, returning the proceeds to the last known owner – or keep the cash if no-one claims it.
A spokesman for ConsMin contacted by Minesite said the situation really was a mystery after a series of attempts to discover the owner of the parcel. “That’s why we’ve turned to ASIC,” he said. “It wouldn’t be such a big issue if we weren’t the subject of competing takeover bids. But we really need to clarify who owns what so the market can be fully informed.” In the formal statement, ConsMin said it had “referred the matter to ASIC for further investigation and action”, adding that ConsMin reserves the right to “pursue further action through the Takeovers Panel in relation to this holding”.
Given that the ConsMin saga has dragged on for a year, and everyone is thoroughly bored with the name calling, this is precisely what was needed to breath a little life into a stale situation. However, to have it delivered as a mystery shareholder, inside a private bank is really quite delicious. Plus, there’s the bonus of the chaps in grey cardigans from ASIC actually being forced to come out from behind their counters to do some work, poor darlings.
