Wilson Asset Management Active (WAM Active) has scrutinised investment firm Keybridge Capital’s conduct and corporate governance, as the two are set to face each other in court.
Keybridge Capital (KBC) commenced proceedings against WAM Active in the Supreme Court on Monday, 1 June, alleging that the firm had improperly transferred 16,057,929 Keybridge shares from 96 different shareholders into its own name on 6 March.
Keybridge has sought that the processed shares be vested with ASIC for sale and that WAM Active pay its related costs, but WAM Active noted that Keybridge has failed on two previous attempts to obtain similar orders.
On 13 December, WAM Active made an off-market takeover offer for Keybridge, but on 8 April, the Takeovers Panel handed down a decision declaring unacceptable circumstances around WAM’s takeover bid, stating it closed on 3 March.
The Takeovers Panel stated all takeover contracts and acceptances in relation to WAM Active’s bid then became void and no transfers should have been registered.
On 9 April, the panel made orders that WAM Active comply with a request for transaction reversal from any person whose Keybridge shares were acquired by the company, with all unprocessed acceptances into WAM Active’s bid to be cancelled.
Keybridge director Antony Catalano then made an off-market offer to the affected shareholders to pay 7 cents in cash per share, as the company launched the lawsuit against WAM Active.
The offer represented a premium of 6.9 cents per share above what the shareholders were attempting to achieve by selling into WAM Active’s last takeover bid.
But WAM Active said as a Keybridge shareholder, it is concerned about the use of shareholder funds on litigation, particularly when alternative solutions are available, adding it also has had “[long-standing] concerns about the conduct and corporate governance of KBC’s directors”.
The firm has accused entities linked with Mr Catalano of making an “opportune attempt to purchase a limited number of shares” in Keybridge, as the firm signalled a proposed $5 million investment in Australian Community Media (ACM) on Tuesday, 2 June.
WAM Active said the firm had taken almost a year to disclose the investment to shareholders, despite it representing 50 per cent of its current net tangible assets.
“Mr Catalano’s unsolicited offer contains inadequate information regarding the value of KBC, which he is uniquely placed to provide, given his involvement in the ACM proposed transaction and as a current director of KBC,” WAM Active stated.
“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 Active has urged former Keybridge Capital shareholders to take no action at this stage.
The specific orders Keybridge sought included a declaration that WAM Active had breached section 650G of the Corporations Act by processing, through its agent boardroom, the acceptances of the processed shares into its name and a declaration that the transfer is void.
Keybridge has asked that ASIC become the registered holder of the shares and to undertake a sale process with an investment bank or stockbroker as an appointed seller.
It also demanded an order banning WAM Active and its associates from being able to acquire any of the shares from ASIC and to pay the costs for the regulator and the plantiff.
Wilson Asset Management said it intends to seek cost orders against Keybridge in relation to the proceedings.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].