The victims of the Nicholas Bolton-Leighton-BrisConnections secret deal have certainly not laid down, with leading dissident unit-holder representative, Jim Byrnes, foreshadowing continued legal action against BrisConnections and adviser, Macquarie Bank. The action relates to the stunning move of 27 year-old Nick Bolton, part-time fashonista, part-time greenmailer, part-time internet entrepreneur who collected $4.5 million in a exchange for his 19.5 percent vote at BrisConnections extraordinary general meeting last Tuesday.
Byrnes confirmed to Crikey that he has engaged Whittens Lawyers and John Rowe to file a class action against both BrisConnections and Macquarie Bank in the coming week. Byrnes confirmed that the quantum of the action will be no less than $390 million and possibly as high as $1 billion.
In a separate action, Byrnes stated that “counsel have been engaged for the purposes of bringing an application to injunct the call and to wind-up the trusts”. It is expected that the second action will be lodged later this week in either the Supreme Court of Victoria or Federal Court.
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The main area of concern for Byrnes (as well as the corporate regulators) revolves around BrisConnections prior knowledge of Bolton’s decision to vote against his own proposed resolutions and whether the Trust had a legal obligation to inform the market (and specifically, their unit-holders) of Bolton’s voting intentions.
The ASX Listing Rules provide that listed entities are required to inform the market of any information of which they are aware that is material the security price. BrisConnections received Nick Bolton’s proxy form, indicating that Australian Style Investments were voting against the proposed resolutions in the afternoon of Saturday, 11th April 2009. BrisConnections did not inform unit-holders of Bolton’s proxy vote until well into the EGM, three days later, on Tuesday 14th April 2009.
Byrnes, who was once a former adviser to Alan Bond and who is representing a group of US-based unit-holders of BrisConnections, told Crikey that:
The general rule in relation to Meetings and EGM’s is that the company must disclose to shareholders all information material to a shareholders decision as to whether or not to vote in favour of the particular resolution. After months of very public court battles the fact that the major shareholders (who was the requisitioned) will be voting against its own resolutions is material to a unit holders decision, it is also information which is material to the price of the securities as it, by itself and had the power of changing the outcome of the meeting.
[BrisConnections] was under a positive obligation to correct a misinformed and inefficient market from the period Saturday 2.23pm (if that actually was the first time they knew about it) until when the meeting occurred.
BrisConnections chair, Trevor Rowe, offered a different view, speaking to Alan Kohler on Inside Business yesterday, Rowe claimed that:
We received the proxies mid-afternoon on Easter Saturday and I was advised we had received those proxies but we were mindful that he may well have turned up at the meeting and of course he would have the ability to vote contrary to the proxies he lodged.
…You don’t normally disclose the proxies you have received.
While that may be the case — one suspects the entire BrisConnections fiasco is about as far from a “normal” situation as one could imagine. It is certainly not “normal” for a renegade shareholder to have spent hundreds of thousands of dollars on Supreme Court legal actions defending his right to conduct an extraordinary general meeting, only to vote against the very resolutions he proposed a few days later. In any event, the Listing Rules refer to whether a “reasonable person” would deem the information to be material, not whether such conduct is “normal”.
In another startling revelation, Rowe, who sits on the board of the Australian Securities Exchange, United Group, Future Fund and QIC, also told Inside Business that he had in fact had discussions with Bolton’s advisers, noting that:
I called [Nicholas Bolton’s] adviser and asked him what he had in mind. He mentioned some numbers to me. I said I thought they were pretty excessive and I gave him a lower number. And he said well Mr Bolton needs $5 million otherwise he is not going to do this. And we thought about it and we decided that we would not engage further.
…I said to him when he proposed a number which I thought was preposterous that it’s more like a two to three [million] number than a seven and half [million] number.
…I didn’t engage in a negotiation.
Perhaps Rowe has a different understanding of what constitutes a negotiation, for what he explained sounds an awful lot like what most people would deem to be a negotiation, that is, a discussion intended to produce an agreement. It also sounds very much like it was Trevor Rowe who contacted Australian Style Investments.
This directly contradicts with claims made by Rowe last week, when he stated that, “For the record, I categorically deny that we approached Mr Rowe with any monetary offer. Indeed, he made that approach.”
It is somewhat strange that a man who sits on the boards of the ASX, Future Fund, QIC and United Group appears to now have less credibility than Alan Bond’s former adviser and a 27-year old greenmailer.
In other BrisConnections news, minority BrisConnections unit-holder, the Julie Anne Barrow Charitable Trust (which owns 0.5 percent of BrisConnections units but is awaiting transfer of just under 5 percent of units) has launched Federal Court action to order BrisConnections extend the last day for accepting off-market transfers of stapled securities.
The Trust is endeavoring to increase its stake in BrisConnections on the basis the “the $1 calls can potentially be met by a market re-evaluation of unit fundamentals (driven by the unique, scarce, highly valuable asset: the long-term 45 year toll road concession), the charity’s cash position and capacity to raise further donations before the 29 April final call.”
As part of its Federal Court action, the Julie Anne Barrow Charitable Trust is alleging that BrisConnections:
…owed The Julie Anne Barrow Charitable Trust a duty of good faith in responding to and providing access to a DVD copy of the BCM Registry of Members in a timely and efficient manner and in an accessible file format. Reasonable access includes reasonable delivery times by BCM of 7 days or less (much less). BCM’s conduct in failing to quickly meet the negligible time and effort involved in providing access to a DVD copy of the BCM Registry of Members, as set out in paragraphs 22C and 22D, was a breach of BCM’s duty of good faith set out in paragraph 22E.
Meanwhile, BrisConnections financial adviser, Macquarie Bank, is believed to be continuing to buy-out private wealth clients from their holdings in the Trusts. Business Spectator reported that:
Chief executive Nicholas Moore is believed to be personally involved in efforts to rescue anxious retail investors, who face two installment plans on a stock trading at 0.1 cent, the lowest price possible on the Australian Securities Exchange (ASX).
The moves to relieve clients will leave the investment bank, which is co-underwriter of the $4.8 billion Brisbane toll road project, with around 10 per cent of the tollroad company.
Renegade unit-holder representative, Jim Byrnes, was skeptical of the moves, questioning to Crikey the price at which Macquarie had been buying the units and noting that former unit-holders may have recourse against Macquarie as part of a potential class action.