Jervois stonewalls as investors rage over US debt deal

Collapsed cobalt play Jervois Global has hired top law firm King & Wood Mallesons to help fend off shareholders pushing for an emergency meeting in Australia.

Chinese companies operating in the Democratic Republic of Congo caused a plunge in cobalt prices after a big jump in production. Picture: AFP

Collapsed cobalt play Jervois Global has hired top law firm King & Wood Mallesons to help fend off shareholders, who accuse the board and management of running a company once valued at $1.6bn into the ground.

Jervois is stonewalling on requests from disgruntled investors pushing for an emergency general meeting in Australia. The company is determined to push ahead a voluntary administration deal in the US that will leave shareholders empty-handed.

AustralianSuper, Jervois’s biggest shareholder with more than 23 per cent of the stock, stands to lose more than $100m in member funds and is understood to have considered joining the rearguard action to salvage something from the Jervois wreck. AusSuper declined to comment.

Jervois also chose to remain silent on hiring Mallesons and the basis for rejecting requests for an emergency annual general meeting (EGM).

Jervois has now received, in the form of 249D requests under the Corporations Act, demands from shareholders representing almost 7 per cent of the register for the EGM.

In letters of response, from King & Wood Mallesons states that the notice are not valid but provides no explanation.

Jervois CEO Bryce Crocker.

The group of shareholders requesting the meeting includes McCusker Holdings, an investment company controlled by barrister and former WA governor Malcolm McCusker.

They are seeking to put motions calling for a vote of no confidence in Jervois chief executive Bryce Crocker and the board, termination of a recapitalisation deal with Boston-based Millstreet Capital Management and for the appointment of an administrator in Australia. The backlash has been building since Jervois unveiled the recapitalisation deal with its major US lender Millstreet on January 2.

Under the deal, Jervois will enter voluntary administration and become privately owned by Millstreet via provisions in Chapter 11 of the US Bankruptcy Code. Mr Crocker and others in the management team who are former high-flyers at Xstrata and Glencore will stay on deck at Jervois under Millstreet ownership.

The disgruntled shareholders have told Jervois they intend to notify the relevant US bankruptcy court in Texas of their push for an EGM in Australia in an attempt to derail the Chapter 11 deal.

Investor Sam McCardel said Jervois was running scared when it came to facing investors who had been left with nothing.

“Bankrupt Jervois have hired top tier law firm Mallesons to write to me claiming my notice calling for an EGM is invalid yet it complies with clause 2 in the Corporations Act. Jervois are clearly afraid of shareholders calling an EGM,” he said.

Jervois was on life support through 2024 as it relied on loan waivers from Millstreet and grappled with a plunge in cobalt prices after a big jump in production from Chinese companies operating in the Democratic Republic of Congo.

In a complaint sent to ASIC, the disgruntled shareholders said they had raised concerns about the company’s finances well before the recapitalisation deal with Millstreet. “Shareholders have questioned management as early March 2024 as to how Jervois was going to meet its debt covenants and whether the company was trading while insolvent. At this time Chinese cobalt producers had flooded the market, causing the cobalt price to collapse and Jervois share price to fall to an all-time low,” the letter states.

Originally published as Jervois stonewalls as investors rage over US debt deal