ASIC probing Magnis chairman’s share buy

Corporate regulator investigators have asked battery operator Magnis Energy for documents relating to its chairman’s purchase of shares valued at $47,800.

Magnis Energy chairman Frank Poullas in Sydney. Last year Mr Poullas said: ‘I am aware that ASIC has required the production of documents from a number of sources relating to some share trades which have not been identified except by reference to a range of dates in the first half of 2020.’ Picture: Britta Campion / The Australian

Investigators at the corporate regulator have asked Magnis Energy, a high-flying electric batteries operator that expects to move into commercial production within months, to hand over documents relating to its chairman’s purchase of shares valued at $47,800.

Documents obtained by The Australian show ASIC officials also requested a large volume of details about the company’s dealings with Dubai-based financiers Negma Group for the same four-month period.

Magnis owns a controlling stake in the New York-based EV batteries producer Imperium3 and a smaller interest in Charge CCCV, which is providing the underlying technology.

The company earlier this month said the long-delayed Imperium3 factory – which it had previously expected to start production in 2019 – was now 57 per cent complete.

Once complete, Magnis says its state-of-the-art batteries will be produced without the need to use expensive cobalt elements, lowering the cost and speeding up recharging.

But the company has become mired in an ASIC investigation, with the corporate regulator in November confirming that inquiries were ongoing.

The regulator has separately warned investors who appear to be using Telegram and other messaging platforms to manipulate the Magnis share price that they face prosecution.

Letters sent to Magnis by senior ASIC officials in September, obtained by The Australian, show the corporate regulator is investigating suspected contraventions of Corporations Act provisions relating to market manipulation and the false trading of shares.

The letter to Magnis identified trading in its shares between March 1, 2020 and July 16, 2020. It requires Magnis to hand over all documents “relating to ASX announcements … dated 4 March 2020, 19 May 2020 and 30 June 2020”. It was on those dates that Magnis disclosed its chairman, Frank Poullas, had purchased about 750,000 shares at around 70.7c per share.

The letter reveals the extent of ASIC’s interest in the company, detailing additional requests for “all communications (including communications internal or external to Magnis) to, copied to, or from Poullas during the relevant period” and for all agreements, contracts, accounts, invoiced and receipts related to Strong Solutions, a company linked to Mr Poullas.

Strong Solutions billed Magnis $171,791 for consulting fees and the purchase of protective equipment in the six months to December 31, 2020. Accounts filed in October for the year to June 30 show Strong Solutions was charging Magnis $1000 in consulting fees for every business day on top of Mr Poullas’s $120,000 salary.

This saw payments to Strong Solutions over 12 months climb to $208,000 – well above the prior year’s $124,000 bill.

While several Magnis directors raised concerns with the company’s deal with Strong Solutions, they were unable to access copies of the contracts signed by the two businesses.

Magnis has boasted a high-profile board in recent years, including former Macquarie executive Warwick Smith, ex-NSW deputy premier Troy Grant and Pillsbury Winthrop Shaw Pittman partner Mona Dajani – although directors have abruptly left the company.

An internal audit report prepared by former Magnis chief financial officer Leslie Hoskin, as reported by The Australian in November, shows concerns about the payments flowing to Strong Solutions. The report, handed to Mr Poullas in early 2020, notes Strong Solutions was billing Magnis $4500 a month. It warns Mr Poullas was charging Magnis his consulting fee with “no independent oversight of this fee or oversight of work undertaken”.

The ASIC letter also requests documents “related to the Negma agreement”, a reference to a deal signed with the Middle Eastern financial group in September 2019. Under that arrangement, Negma was to provide up to $8m over 12 months with the price of shares issued at an 8 per cent discount to the average price.

Neither Magnis nor Negma respond to a request for comment. An ASIC spokesman declined to respond.

Mr Poullas has previously played down reports that the corporate regulator was making inquiries about the company.

“I am aware that ASIC has required the production of documents from a number of sources relating to some share trades which have not been identified except by reference to a range of dates in the first half of 2020,” Mr Poullas said last year.

Magnis’s share price rose more than 210 per cent in 2021 but has fallen 24 per cent this year to 44c.