It’s not often the murky world of Perth small-cap mining industry share deals has a bright spotlight shone on it, but that’s exactly what is happening in the court battle between West Australian mining heavyweight Grant Davey and former Patterson’s and Euroz broker Tim Kestell.
Kestell is suing Davey for 50 million shares of Lotus Resources, the ASX-listed owner of the Kayelekera uranium project in Africa that was once the property of Paladin Resources.
Those 50 million shares in the project are now worth in the vicinity of $11m. Not a bad claim for what was effectively an introduction fee for Kestell.
While Perth’s legal fraternity rack up the court costs – Davey has engaged high-profile litigator Martin Bennett to represent him – it’s not so much the technical contract law case that has piqued Margin Call’s interest, but some of the admissions made under oath about how Perth brokers do their business.
After the amusing revelations this week from Kestell that his job description was “wheeler and dealer” and that his wife owns their multimillion-dollar Cottesloe property – “it’s in my wife’s name, like lots of intelligent corporate people do” – things got even more interesting.
During cross-examination, Bennett took Kestell to confidentiality documents that he signed on behalf of his company, Globalwide, with Paladin regarding the African mine. Those confidentiality documents gave him access to a virtual data room, protected by a password.
“You understood what a confidentiality agreement was, didn’t you,” asked Bennett.
“I do,” Kestell replied.
“You understood that the primary obligation that you would have, well, Globalwide would have, as the recipient of confidential information, is to hold that information in confidence and not disclose it without the prior written consent of Paladin. Isn’t that right?” asked Bennett.
“Yes,” he responded.
But Bennett told the court that Kestell “immediately breached the confidentiality agreement” by sending the link and password to another high-profile Perth business figure, Evan Cranston.
Kestell’s reply? “Well, I believed that Mr Cranston and I were at the time looking to do a shell and potentially had a transaction that we might have been able to do together.
“And so I thought that that was, you know, not …” he continued, until Bennett intervened, asking: “He wasn’t an officer of Globalwide?”
“No, he wasn’t, no,” Kestell said. “Probably technically – technically he wasn’t.”
“Did you seek the consent of Paladin to show it to an executive director of Boss?” Bennett continued.
“Technically probably it wasn’t the right thing to do but it was – it’s something that happens,” Kestell responded.
All in the name of wheeling and dealing.
Bankers’ bonus
Santa looks to have slipped down the chimney early for the clutch of leading investment bankers who are flogging their shopping centre investment in suburban Melbourne.
The consortium of investors, which includes UBS heavyweight Kelvin Barry and his former advisory colleagues Matthew Grounds and Guy Fowler – who have since moved on to found and lead market rival Barrenjoey – are poised to accept a compelling offer for their Mernda Junction Shopping Centre.
The group had been expecting a sale price north of $60m for the three-year-old asset, which has been for sale for a month in the hands of Stonebridge Property Group.
The group of 12 investors are believed to have paid $8.6m for the land in August 2016 before going on to develop the site.
A successful divestment would be second-time lucky for several members of the group, who were also part of the consortium that doubled their money when they sold out of the Springhill Shopping Centre in Melbourne’s southeast for $43.5m at the start of 2017.
This time around, the group of 12 investors all hold their respective stakes in Mernda Junction Holdings via various individual entities.
Melbourne-based Barry is the biggest shareholder with about 16 per cent, while ClearBridge Capital’s Richard Elmslie and Quadrant Capital MD Chris Hadley also have 12 per cent stakes. UBS senior banker Andrew Stevens has 7 per cent and Flagstaff Partners deputy chair David Williamson owns about 6 per cent.
Domain departures
The axe has swung at Nine Entertainment-controlled listed real estate platform Domain Holdings just in time for Christmas, with chief executive Jason Pellegrino making 69 of his staff redundant as well as farewelling two key members of the leadership team.
Domain is chaired by former Fairfax Media chair Nick Falloon. Nine, led by Mike Sneesby, has a 60 per cent stake in Domain. Pellegrino informed his workers earlier this week of the staff cull.
Margin Call understands that Domain’s chief technology officer David Bolton will depart after it was decided by Pelligrino that the CTO role would be combined with that of chief product officer Nathan Brumby, who will now become the company’s chief product and technology officer.
Also out the door is Domain’s longstanding chief people and sustainability officer Rosalind Tregurtha, who was a human resources executive at Fairfax before the companies were demerged. It is understood Tregurtha had been in discussions with Pellegrino for some time around her future.
Stuart Powell, currently head of people operations, will become interim head of Domain’s people experience, while director of corporate communications Sarah Macartney will take over responsibility for sustainability.
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