Global Lithium board to be dominated by China-linked interests after battle lost
Global Lithium’s chair is walking away after repeatedly calling on Australian regulators to intervene and block a group of allegedly ‘associated’ investors from gaining control of the board.
The chair of Western Australia-based Global Lithium Resources has quit after losing a battle for control of the company with a group of China-linked shareholders previously accused of working together to dominate the board.
Executive chair Ron Mitchell on Thursday resigned from the company after a months-long battle, which included appeals to the Foreign Investment Review Board and the Takeovers Panel to intervene.
The Global Lithium Resources board under Mr Mitchell argued that a group of shareholders which owned 30-40 per cent of the company was working together to take control of the board, which would then give them “effective control” of the Manna Lithium project near Kalgoorlie.
The FIRB is yet to rule on the matter and the Takeovers Panel ruled that the actions of the shareholders in question could be adequately explained as shareholder activism, and hence it would not intervene.
Following the decision of Mr Mitchell to resign and fellow director Matthew Allen to withdraw his nomination for election as a director, the board, subject to a vote late on Thursday, will now be comprised of three directors of Chinese descent, two of which, incumbent Dianmin Chen and David Sun, have held senior positions with major Chinese-owned mining companies.
The other incoming director, WA-based property development and migration services company owner Leon Zhu, has pumped more than $10m into buying shares in the company.
On Thursday he told The Australian there was not a foreign takeover under way, and has previously argued in submissions to the Takeovers Panel that he has simply been acting as a shareholder unhappy about the company’s performance.
Mr Mitchell has orchestrated a number of legal strategies in recent months via the Foreign Investment Review Board and the Takeovers Panel, in an attempt to have them intervene in what he has characterised as a strategy from a group of associated investors to execute a change of board control, and which had the potential for “transfer of effective control of Global Lithium’s Manna lithium project’’.
Mr Mitchell complained to the Takeovers Panel in January, arguing that the shareholders - including Chinese battery materials company Canmax - were undisclosed associates and were attempting to take control of the company’s board.
For his part, Mr Zhu, in a submission to the panel, denied this allegation and argued that he was acting “as a prudent shareholder concerned with board performance and share price’’.
Mr Zhu twice tried to oust the company’s board last year, submitting a 249D notice in August trying to push out then-non-executive directors Greg Lilleyman and Hayley Lawrance.
Mr Zhu’s company was putting up its own nominee to the board, however Global Lithium at the time found that the notice to requisition a meeting was invalid.
Mr Lilleyman and Ms Lawrance later resigned as directors.
Global Lithium lodged a number of applications with the Takeovers Panel and also the Foreign Investment Review Board, as well as applying to the Supreme Court in WA to delay the annual meeting to allow for the FIRB to rule on the matter.
The bid to have the AGM delayed until March 20 failed, however it was successfully pushed back from the initial date in late November.
The company in early November said it “is concerned about the circumstances surrounding a potential change of board control of the company and the consequences that could follow, including the potential transfer of effective control of Global Lithium’s 100 per cent owned Manna lithium project near Kalgoorlie’’.
“The Manna lithium project is one of the largest lithium developments in Australia and is important to Australia’s desire to protect ownership and control of critical minerals projects of this type.’’
The company on Wednesday said it had made several reports to the federal Treasury Department about potential breaches of the Foreign Acquisitions and Takeovers Act (FATA), starting in October, but Treasury had told it that it could not update the company on its investigations “due to protected information provisions under the FATA’’.
The company also said that the Takeovers Panel had declined to conduct proceedings in relation to the company’s application seeking a declaration of unacceptable circumstances “in relation to undisclosed associations between certain identified shareholders’’.
A Takeovers Panel finding published on February 6 explained that the Panel “considered whether the alleged associates’ activities were explicable as examples of shareholder activism that fell short of association. In our view, much appeared possibly explained as shareholder activism’’.
“We are inclined to the preliminary view that the evidence points to shareholder pressure rather than combining for taking of control.’’
The Panel also said Treasury would be better-placed to investigate any alleged association as it had been considering the issue for longer.
Mr Mitchell said in a statement to the ASX on Wednesday the legal strategies had been pursued in an attempt to act in the interests of all shareholders.
“We consider Manna to be among the most advanced lithium development projects in Australia, with high corporate appeal and poised to be among the first to benefit from a recovery in lithium prices and market sentiment, whenever that occurs,” Mr Mitchell said.
“We did not make these regulatory referrals lightly and did so supported by extensive legal advice, at all times understanding the need to strike the right balance between expending company resources and doing what is in the best interests of all of our shareholders.”
Mr Zhu’s lawyer on Thursday told The Australian, “There is no takeover by foreign interests’’.