C4V says the clock’s ticking on joint venture, as Magnis pushes for time to resolve factory dispute

Friend-turned-foe C4V wants the courts to bring forward its fight for control of battery gigafactory iM3NY to January 2, while Magnis is attempting to stall for time.

Magnis’ US managing director, Hoshi Daruwalla, left and chair Frank Poullas, right, arrive for the company’s AGM. Picture: John Feder

Magnis Energy Technologies’ key technology partner has accused it of delaying a move to rescue their joint battery gigafactory venture in a bid to allow the company to fail, saying it had at most 33 days worth of funding left ­before it was defunct.

Documents filed in the Delaware Chancery court by Charge CCCV, which licensed its technology to Magnis for exclusive use in North America, reveal the collapse of the relationship between the two sides.

C4V and Magnis have been at war since November 15, when Magnis moved to seize control of Imperium 3 NY, a 1.8GW battery gigafactory the two companies have poured millions of dollars into over several years.

Magnis, iM3NY, and C4V have been gripped by crisis after private lenders Atlas Credit Partners, which extended a $100m line of credit for the gigafactory, issued a string of covenant breaches citing a failure to pay creditors, suppliers and interest.

However, court documents filed by C4V reveal Magnis was given notice of six loan breaches on November 2 but did not disclose any issues to the market until November 10.

Magnis only moved to put its shares into a trading halt on November 6 to “to prepare a disclosure in relation to iM3NY’s loan facilities”.

C4V is calling on the courts to bring forward a fight over control of iM3NY to January 2, while Magnis has pushed for the matter not to be heard for at least 120 days.

Lawyers for C4V claim Magnis has told them iM3 will only survive if they “work with the ­lender”.

“It is evident that the secured lender wants nothing to do with Magnis,” C4V claims.

“Magnis’s opposition brief also sought to delay trial until after it expected iM3 and Imperium to “go under” by claiming discovery would be too broad, and witnesses too many, to allow for anything less than a three-day trial set no sooner than mid February to mid March.”

Magnis director Claire Bibby.

This comes after Magnis chair Frank Poullas and director Claire Bibby, who both sit on the board of iM3NY, allegedly attempted to seize control of the board of the gigafactory by muting the microphones of C4V’s directors and ramming through a number of motions.

Atlas Credit Partners dumped all Magnis’s directors from iM3NY’s board on November 29, the same day as the company’s annual general meeting in ­Sydney.

But as revealed in The Australian, Magnis did not disclose the move to shareholders and only revealed it had been hit with more breaches by Atlas Credit Partners the day after the AGM.

C4V claims its case against Magnis must go to trial before February as “the parties agree that neither iM3 nor its New York operating subsidiary, Imperium, have the cash to survive that long”.

“The parties agree that iM3’s survival hinges on working with Imperium’s secured lender and attracting financing,” C4V claims.

“But Magnis has shown itself incapable of satisfying either need in the 30 days since its unlawful coup, largely due to its pattern of self-dealing and mismanagement.”

Magnis chair Frank Poullas.

Instead, C4V alleges Magnis has allowed term sheets to “wither and die on the vine”, while ­attempting self dealing over iM3NY.

C4V claims when it filed its court action against Magnis on November 17, after Mr Poullas and Ms Bibby’s board manoeuvres, it “did not anticipate that Magnis would make zero effort to address iM3’s liquidity needs in the 30 days since its unlawful coup”.

Instead, C4V claims Magnis has allowed a $US48 ($73m) rescue deal for iM3NY to expire after refusing to consider it.

“This is because the lender was unwilling to work with iM3 without diluting Magnis’s interest and removing any Magnis loyalists from the iM3 and Imperium boards,” C4V claims.

“Magnis is insolvent but for its practice of claiming iM3’s and Imperium’s assets as its own.”

In its full-year accounts, Magnis revealed it had $1.1m in negative equity, after $205m in liabilities was set against $203m in assets, with iM3NY making up almost half Magnis’s assets.

C4V claims if Magnis was not allowed to recognise C4V in its accounts it would “ jeopardise the significant renumeration (sic) that the Magnis loyalists receive while pushing the false narrative of Magnis’s solvency”.

“No reputable lender will do business with iM3 so long as the Magnis loyalists claim to control the board. Defendant Poullas, who serves as Magnis’s executive chairman, and defendant Bibby and Mr Gunesekera, who serve on Magnis’s board, are inextricably intertwined with Magnis’s gross mismanagement and unlawful conduct,” C4V alleges.

“The situation worsened last week when an article was published pointing out that Magnis’s representations to this court about iM3 and Imperium were inconsistent with what it had told investors.”

C4V CEO Shailesh Upreti, centre, has taken aim at Magnis over the company’s attempt to take control of iM3NY.

In an affidavit filed with C4V, chief executive Shailesh Upreti reveals staff at iM3NY have told him the battery company only has cash to fund its operations until January 15.

“On November 22 and 30, I wrote on behalf of myself and Mr Driscoll to Mr Poullas and Ms Bibby seeking, among other things, to discuss iM3’s liquidity needs and financing options,” Mr Upreti said. “Neither Mr Poullas nor Ms Bibby has responded to those requests.”

But Mr Daruwalla reveals Mr Poullas and Ms Bibby have attempted to call several iM3NY board meetings on short notice.

Shares in Magnis remain suspended from the ASX.

A Magnis spokeswoman did not respond to requests for comment.