Magnis says failure to disclose suspension of payments to directors wasn’t against rules

Magnis Energy Technologies says its failure to inform the market that it was suspending payments to directors wasn’t in breach of listing rules.

Magnis US managing director Hoshi Daruwalla and chair Frank Poullas. Picture: John Feder

Magnis Energy Technologies says it did not need to tell the market when it suspended payments to multiple directors and its chair last year, despite listing rules calling on the company to disclose any changes to “the material terms of any employment”.

ASX listing rules require companies to disclose the material terms of any employment agreement and “any material variation to such an agreement” under continuous disclosure rules.

Magnis revealed in its latest quarterly activities report that several directors had stopped being paid by the company last year in a bid to conserve cash.

The ASX-listed battery and graphite player revealed it had made the move as its cash balance dwindled in the face of debt repayment costs from its American gigafactory iM3NY.

Magnis told investors on Wednesday it had just $532,000 in cash in the bank and had moved to tap lenders for a $4.6m lifeline charged at 5 per cent a month. The company also told investors its chair Frank Poullas and Tanzania-based director Peter Tsegas had “not received any payments for services rendered since 1 July 2023 which also includes any related parties”.

In addition, Magnis disclosed new director Fabrizio Pirelli had not been paid at all since joining the board on July 31, while managing director (US) Hoshi Daruwalla has not been paid since October 1 last year.

But when asked why Magnis had not disclosed the move to suspend payments to Mr Poullas or Mr Tsegas or later Mr Pirelli or Mr Daruwalla, Magnis said it did not need to.

“Magnis has not breached ASX listing rule 3.16.4,” a company spokeswoman said.

Magnis did not disclose it had stopped paying these directors in July, nor in November at its annual general meeting when it called on investors to approve payments to board members.

Shares in Magnis are down more than 73 per cent since July 1, from 16c to just 4.2c.

The ASX has previously taken Magnis to task over payments to directors, warning it breached listing rules after paying $243,246 to them in breach of its shareholder approved cap.

“The company regards this as an unfortunate and disappointing oversight and will ensure that such an oversight does not occur again in the future,” Magnis told investors in November.

The Australian Securities and Investments Commission is investigating Magnis over “suspected false or misleading statements and breaches of continuous disclosure obligations”.

Magnis has been repeatedly pinged over its market disclosures, with the ASX pulling the company from trade in early December after The Australian revealed it had failed to reveal to shareholders it had lost control of its major North American asset.

The lenders on Imperium3 New York, Magnis’ battery gigafactory the company once claimed was worth as much as $4bn, moved to take control of the operation in December after a litany of loan covenant breaches and a breakdown in relationship between Magnis and its joint venture and technology partner Charge CCCV.

Texas-based lender Atlas Credit Partners had extended a $US100m ($147m) credit facility to iM3NY. The ASX pulled Magnis from trade on December 6 warning it would not allow the company to return until its board satisfied the market operator to “comply with listing rule 3.1 and its periodic reporting obligations on an ongoing basis”.

Magnis told investors on December 27 the ASX would hold its shares in continued suspension “until ASX is satisfied of Magnis’ compliance with listing rules”.

“Magnis continues to work with ASX in an attempt to satisfy ASX of its ability to comply with the Listing Rules in relation to material developments regarding LLC, Inc and the credit facility,” the company told investors at the time.