Magnis Energy moves to shut down critics

Magnis Energy is threatening former directors, executives and major investors who the company claims are circulating damaging information.

Magnis Energy chairman Frank Poullas. Picture: Britta Campion

Magnis Energy – the hi-tech electric battery player that has become a sharemarket favourite – is threatening former directors, executives and major investors who the company claims are circulating damaging information.

Perceived Magnis critics have also received threatening, anonymous, phone calls – at least one former executive has reported these to NSW police.

Magnis has been under considerable scrutiny from both the Australian Securities & Investments Commission and the ASX relating to the potential manipulation of its share price and other issues.

In a letter sent by lawyers engaged by Magnis last month, K&L Gates partner Russell Lyons accused several people associated with the company of “acting in concert with a group of shareholders (and former investors)” in using an anonymous email to “disseminate misleading, deceptive and defamatory content”.

The text of one email allegedly sent by the group contains claims that Magnis has acted illegally.

“The company considers the contents of the email to be misleading, deceptive and defamatory and … may also constitute an attempt to manipulate the market for the company’s shares,” Mr Lyons wrote.

One recipient of the letter, AL Capital chief executive Wayne Mo, wrote back: “AL Capital and I personally had no involvement or any knowledge of the email you mentioned. We only know about its existence from your letter.

“Your accusation of AL Capital’s (or my personal) involvement in the email is totally untrue. We reserve our right to take legal actions against you and your clients, should you not cease the accusation immediately,” Mr Mo, who runs the investment arm of the Chinese-backed property developer Aqualand, wrote.

AL Capital was earlier one of Magnis’ largest shareholders.

Former Macquarie executive Warwick Smith sat on the Magnis board as its representative.

In November, The Australian reported that Magnis executive chairman Frank Poullas had written to Mr Mo and urged him to increase his stake in the company “at considerably lower prices” to a proposed share placement.

Mr Mo said he “did receive that email and it had market sensitive information, and we told Frank we had no intention to act that way”. However, Mr Mo made his comments to The Australian well after Mr Lyons had circulated the legal threat.

Separately, NSW police confirmed that it had been alerted to at least one incident involving a former Magnis figure who was allegedly threatened and harassed.

The Australian does not suggest this was done by a company employee, or at the company’s behest – only that the threat was related to perceived criticism of Magnis by the recipient.

Magnis has previously warned other former company figures, including ex-chief executive Frank Houllis – and one-time directors Peter Sarantzouklis and James Dack – that they could also face legal action.

Magnis reports show, in the last financial year, it spent $1.48m on legal and consulting expenses. This came after Magnis spent $1.29m on legal expenses last financial year.

A confidential audit of payments and agreements, created by former Magnis chief financial officer Meghan McPherson and its ex-director Leslie Hosking in early 2020, warned that some lawyers had been engaged with no written contact. “No contract in writing received from the lawyer until 18 Feb 2020 after several requests,” it read in part.

The company was also entangled in litigation with a former consultant, Stefan Spruck, who claimed he was owed more than $1m by the company after it allegedly terminated his role when he revealed the company was dealing with alleged drug smuggling kingpin, Hakan Arif, in Turkey.

A Magnis spokesman did not respond to requests for comment.

Despite the upheaval, Magnis shares have risen 142 per cent this year, although they have fallen 40 per cent in the past month.

Shares fell 2 per cent on Wednesday to close at 46c.

That was after The Australian published documents – obtained through a freedom of information request – that showed Magnis had been approached by ASIC in mid-September with requests to hand over various documents.

The request for Magnis to produce documents came one day after The Australian’s initial report into the batteries company that raised questions about the veracity of some of the $900m in contracts that had been signed.

The report also raised queries about the disclosure of the terms of a $US63m ($A88.3m) loan, which the company later clarified had also required a fee – in the form of shares – to be paid to the lender.

On November 17, in response to The Australian’s report that ASIC was investigating Mr Poullas, the company told the ASX it was “not under investigation”.

“The media article repeats previously published speculation concerning trading in the company’s shares and inquiries undertaken by ASIC in relation to some trading in those shares,” the statement reads. “The company is not aware of any materials which would indicate that the company is or is likely to be under any form of investigation.”

Magnis, which owns a controlling stake in New York-based batteries manufacturer Imperium3, has repeatedly been queried by the ASX, including in October when the company was forced to respond to questions about the size of contracts signed with Sukh Energy, one client. Financial reports showed Sukh had few assets and little revenue. That is despite Magnis claiming Sukh had signed a deal projected to provide $US243m by 2026.

Despite providing no detail, Magnis claimed in its response to ASX queries that the Imperium3 business in New York would have yearly revenues of $80m in 2022, rising to $1.8bn in 2027.

In November, Magnis was forced to retract a claim made at its general meeting that the company could be worth $10bn.