Magnis agrees to standstill on iM3NY dispute
Magnis has agreed to conditions with C4V which require unanimous board approval for almost all actions of their joint venture iM3NY.
Magnis Energy Technologies and Charge CCCV have struck a deal to restore the board of the two companies’ joint venture after a court squabble over control of a battery gigafactory.
Papers filed in the Delaware Chancery court reveal ASX-listed battery and graphite play Magnis agreed to C4V’s proposal to put in place a deal to maintain the status quo of their joint venture, pending a trial on January 2 over control of the asset.
This comes after Magnis claimed to seize control of the battery factory Imperium3 New York in November in response to a series of loan breaches on a $US100m ($149m) credit facility.
Magnis, which majority owns iM3NY, claimed on November 15 to have seized control of the battery factory, which it funded the construction of in upstate New York.
This saw Magnis appoint a third director, Giles Bunesekera, to the iM3NY board and replace the chief executive of the battery factory with loyalist Wade Guindy.
However, this triggered a court fight with C4V, which licensed its technology to Magnis for exclusive use in North America and which owns a minority stake in iM3NY.
C4V claimed, in court documents, Magnis engineered a takeover of the board of iM3NY by muting the microphones of directors on the battery factory’s board at a meeting, before ramming through a series of motions to remove the existing management and add another board seat in their favour.
At its annual general meeting on November 30 Magnis North America managing director Hoshi Daruwalla said Magnis had seized control of iM3NY “to take control of our own fate”.
However, court documents filed by C4V reveal Atlas Credit Partners, which advanced the $US100m loan, moved to tip out almost all incumbent directors of iM3NY on November 29.
Only C4V chair and founder Shailesh Upreti was retained on the board, while two directors backed by Atlas Credit Partners were retained.
The court documents filed two days ago reveal C4V proposed to return the iM3NY board to its previous state, retaining Magnis’ majority stake with chair Frank Poullas and director Claire Bibby returning alongside C4V’s Mike Driscoll and Mr Upreti.
However, the deal requires iM3NY to not take a number of actions without the unanimous approval of the board.
This includes entering into any transaction, creating shares, taking on debts of greater than $5000, hire or fire any staff or filing for bankruptcy.
C4V warned in court iM3NY was at risk of failure, noting Magnis itself was allegedly “insolvent”.
In its full year accounts Magnis revealed it had $1.1m in negative equity, with the assets of iM3NY making up almost half its balance sheet.
The documents claim Mr Upreti believes the factory had funds to last until January 15, noting Atlas Credit Partners “wants nothing to do with Magnis”.
“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 has been contacted for comment.
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