Sanjeev Gupta’s $100 million proposal to invest in small Adelaide company’s iron ore assets voted down
A $100 million proposal from billionaire Sanjeev Gupta to invest in a small Adelaide company’s iron ore assets has been voted down at a fiery meeting, with calls now for one of the directors to resign.
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Havilah Resources director Chris Giles has killed off a $100 million deal with Sanjeev Gupta’s GFG Alliance, prompting calls for him to resign from the company’s board.
At a fiery meeting held in Adelaide today, Dr Giles defended initially recommending the deal to shareholders earlier this year, then letting his fellow directors know only on Monday this week that he would vote against it.
Until Monday he had made no recommendation for or against the deal, but had emailed shareholders expressing concerns.
Dr Giles’s 19.2 per cent stake in the company was the deciding vote which killed off the deal, chairman Mark Stewart told the meeting.
In combination with fellow co-founder and dissident shareholder Bob Johnson, who is the subject of an ongoing Australian Federal Police Investigation, Dr Giles’ vote against the deal ensured it would not succeed.
Dr Giles, dressed in hi-vis mining gear, told the meeting that following the receipt of an independent expert’s report which found the deal was “not fair” but “reasonable”, and having done his own calculations on the value of the company’s assets, he could not support the deal.
But former federal Senator Chris Schacht, who is a Havilah shareholder, said Dr Giles should not have recommended the deal then changed his mind.
“You should’ve resigned from the board, that would have been the honourable thing to do,’’ Mr Schacht said.
“I don’t know what you were doing signing this agreement.’’
Mr Schacht said the company was “bedevilled by factional fights” and challenged Dr Giles and Dr Johnson to present a better deal than the GFG Alliance proposal to shareholders at the company’s next annual meeting.
The GFG deal would have seen Mr Gupta’s company end up with 51 per cent of the stock in Havilah after investing $100 million in an iron ore project and a copper project over several years.
Critics including Dr Johnson, who set up the Save Havilah website, argued that the deal gave GFG the Kalkaroo copper project for nothing.
But chief executive Walter Richards said this was a foolish notion, as any development in Kalkaroo would have needed a large equity investment, meaning GFG would also have to contribute if it didn’t want its stake in the company to fall.
Mr Schacht said Havilah now had an “impossible governance structure’’ and implored Dr Giles to “Get out and give someone else a chance to resurrect the standing of this company’’.
It emerged late in the meeting that Dr Johnson has also lodged an application to spill the board and replace Mr Stewart and fellow independent director Martin Janes.
Mr Stewart told the meeting it was clear the two founders were “only interested in continuing to exercise control’’ of the company.
“And that is why Havilah has had limited success in its 20-plus years,’’ he said.
“To say we are disappointed is a complete understatement and to have spent a year negotiating this deal as well as the substantial amount of work that has been carried out since it was released to the market only to get this result is unfortunate and a huge lost opportunity for the shareholders, company, and the state of South Australia.’’
GFG subsidiary SIMEC said the outcome was disappointing.
“SIMEC’s proposed investment plan foresaw an intensive exploration and development program of the resource prospects at Havilah, evolving them to become part of GFG’s ambitious investment plans in South Australia,’’ the company said in a statement.
“Given the initial unanimous support of the Havilah Board, GFG was looking forward to a long and close working relationship with Havilah, bringing substantial and sustained value to all stakeholders for generations to come.
“South Australia is fortunate to enjoy a rich mineral wealth, particularly in iron ore and copper. GFG and SIMEC will now review and take forward some of the diverse range of alternative options we have for ore and copper mineral development as part of our long-term ambitions for a substantial industrial future for Whyalla, including extensions to SIMEC Mining’s existing operations.’’
GFG owns the Whyalla steel mill and other iron ore assets in the Middleback Ranges.
cameron.england@news.com.au
