A letter and a call, page-21

• Apr 10 2018 at 11:00 PM
• Updated Apr 10 2018 at 11:00 PM

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Metgasco and fund manager 8IP face Nick Bolton-related board raids

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Investors are fighting for control of Metgasco, which received $25 million from the NSW government in 2015. Glenn Hunt
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by Patrick Durkin

The fund formerly run by activist investor Nick Bolton is alleged to be behind a board stoush at Metgasco – the gas company sitting on $25 million after it was paid by the NSW government to stop coal seam gas work – with control to be decided at a shareholder meeting on Wednesday.
Sydney fund manager 8IP Emerging Companies also faces a shareholder meeting next Monday, triggered by another fund associated with Mr Bolton – Aurora Funds Management – to remove its board.
Fund manager Geoff Wilson has urged the corporate regulator to take a closer look at the parties behind Aurora and Keybridge Capital, the fund formerly run by Mr Bolton and now associated with Perth investor Farooq Khan, in light of findings by the Takeovers Panel, which found the funds were working together last year to try to get their hands on more than $57 million in cash held by Molopo Energy. Keybridge is challenging that finding.
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Nick Bolton is fighting ASIC and the ATO. James Davies
The separate board stoushes come as Mr Bolton's 10-year showdown with regulators comes to a head this month after Mr Bolton has asked the Federal Court to remove a ban on him from managing companies and quash a $613,000 tax debt arising from his infamous 2009 BrisConnections deal. Court documents reveal that ASIC is seeking to extend Mr Bolton's ban from three to five years.
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On Wednesday, shareholders of Metgasco are being asked to choose between voting the company's largest shareholder off the board – M&A Advisory's Andrew Purcell, whose firm holds a 19 per cent stake – and four other directors that Mr Purcell claims have been installed through connections to Keybridge Capital, now associated with Mr Khan. Entities associated with Mr Khan and Keybridge own more than 18 per cent of the company.
Conflicts of interest

In an extraordinary memorandum to shareholders lodged on the ASX, most of Metgasco's board – including chairman Alexander Lang, Philip Amery and Keybridge Capital representative John Patton – urge shareholders to remove Mr Purcell, claiming that he has "conflicts of interest".
The directors accuse Mr Purcell of having breached the company's "negotiations protocols" in relation to significant transactions with third parties. This is understand to be a reference to Metgasco's dealings with Byron Energy, which Metgasco has loaned money and has a large stake.
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Farooq Khan is another key player with his Bentley Group holding a substantial share in Keybridge Capital. James Davies
However, Mr Purcell has hit back in a letter to shareholders ahead of Wednesday's EGM, warning he is concerned about "possible related party transactions and undeclared associations" on the board.
"As Metgasco's largest shareholder, we are very concerned about the influence Keybridge Capital and Aurora has over our board and, therefore, your company," Mr Purcell writes.
Mr Purcell writes that shortly after ASIC banned Mr Bolton from running Keybridge in December 2015, Mr Amery joined the Metgasco board and in 2016, introduced Mr Lang, who was subsequently appointed chairman. In mid-2016, Metgasco's CEO resigned and Mr Lang assumed executive control of Metgasco.
Mr Purcell claims that Mr Lang "has returned capital to shareholders in November 2016, at a time when the company had outstanding tenders on several exploration licences which usually require significant expenditure, opposed M&A Advisory's two nominees to the board and appointed Mr [John] Patton, also the managing director of Aurora Funds Management, to the board at the nomination of Keybridge Capital".
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Geoff Wilson thinks ASIC should take a close look at Aurora and Keybridge Capital. Daniel Munoz
Real intentions unclear

The board of 8IP, led by Jonathan Sweeney, have also hit back at the move by Aurora, which has built up a 20 per cent stake and is now seeking the removal of the current board and the election of three directors that 8IP claim are closely associated with Aurora.
"Aurora will effectively take control of the company without paying a premium," the current board warn. "Aurora's real intentions are unclear ... Aurora's history raises governance concerns", the board said in an ASX announcement.
Mr Bolton has shown a well-practised strategy for acquiring control of companies with liquid assets or lots of cash used successfully in recent years at Keybridge Capital and Aurora Funds Management.

Keybridge's second largest shareholders sold out to Mr Khan's Bentley Group in May 2016 and around the same time, Keybridge sold out of Aurora. The buyer was Melbourne businessman John Patton's Seventh Orion. He became a director of Keybridge shortly after.





















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