Wilson strikes back in Keybridge share controversy

Sydney-based fund manager Geoff Wilson says Supreme Court action from Melbourne’s Nicholas Bolton is unnecessary.

Nicholas Bolton

Sydney-based fund manager Geoff Wilson says Supreme Court action from Melbourne’s Nicholas Bolton over a parcel of Keybridge shares is unnecessary and a waste of shareholders’ money.

Mr Wilson has retaliated against Mr Bolton’s claim that his eponymous listed fund, Wilson Asset Management, improperly transferred Keybridge shares into WAM’s name in a fight to control the company.

“WAM Active is concerned about the use of Keybridge shareholder funds on litigation, particularly when alternative solutions are available,” Mr Wilson said in an ASX announcement.

It is the latest in the year-long row between Mr Wilson and Mr Bolton, who is Keybridge’s managing director.

Mr Wilson has lobbed four takeover bids for Keybridge, a penny stock cashbox, in the past 12 months, with Keybridge rebuffing him each time. But in March, WAM announced it had a relevant interest in Keybridge of more than 50 per cent via ­acceptance into the offer, which has since been disputed.

At the centre of Mr Bolton’s case against WAM is 16.06 million Keybridge shares that he said WAM improperly transferred into its own name. Keybridge has claimed WAM’s bid was void at the time of transfer and has launched legal action in the NSW ­Supreme Court in an effort to force the sale of those shares.

Mr Bolton is now seeking a court order that the processed shares vest in the Australian Securities & Investments Commission and the regulator appoint a stockbroker to sell the shares.

But Mr Wilson said such action was not necessary.

“Keybridge has already failed on two previous attempts to obtain orders of this kind, with the Takeovers Panel twice refusing to make the orders Keybridge is now requesting in its third attempt with the instituted proceedings in the Supreme Court of NSW,” Mr Wilson said.

The Takeovers Panel ordered on April 9 that WAM must comply with a request from any person it acquired Keybridge shares from to reverse that transaction and that WAM cannot exercise any voting rights attached to those shares.

Mr Bolton told the market last week that Keybridge director, regional media mogul Antony Catalano, intended to buy the 16.01 million shares WAM transferred into its own name, at 7c a share compared with WAM’s 6.9c.

Mr Wilson said Mr Catalano’s offer was opportunistic and lacked detail.

“WAM Active notes that entities associated with Mr Catalano, a director of Keybridge, are making an opportune attempt to purchase a limited number of shares in KBC,” Mr Wilson said in the ASX announcement.

“Mr Catalano’s unsolicited offer contains inadequate information regarding the value of Keybridge, which he is uniquely placed to provide.

“WAM Active observes that, if Mr Catalano were to make a bid for the benefit of all Keybridge shareholders, an independent expert report would be required.”

Mr Catalano said his proposal only applied to 96 shareholders that WAM transferred shares from and not a full takeover.

“I am fully aware of my obligations to all shareholders if I was mounting a full takeover bid. It is clearly a potential offer to a select group of shareholders whose shares were improperly processed by WAM Active,” Mr Catalano told The Australian.

“Geoff is held in high regard and manages an enormous amount of money. This is an extraordinary petty fight for a highly sophisticated investor.

“I would have thought that Geoff would have had more important things to do than continue his ongoing battle.”

The ASX suspended Keybridge from trading last July after the company spent $5m in an “incomplete deal” involving Mr Catalano’s Australian Community Media, which owns The Canberra Times and a suite of ­regional newspapers. Mr Catalano also guaranteed the transaction if it could not be completed.

Broker error

It is believed the $5m deal with Mr Catalano infuriated Perth-based businessman and former Keybridge shareholder Farooq Khan, who subsequently agreed to sell his 31.7 million shares to WAM at 6.9c apiece.

But a broker error transferred Mr Khan’s shares into a rival takeover offer from Aurora Funds Management, which counts Mr Bolton as its biggest shareholder and was offering Keybridge shareholders 7c a share. However, the Takeovers Panel also ordered that any person who accepted into Aurora’s offer had the right to withdraw that acceptance, and Mr Khan exercised that right on May 21.

But Aurora managing director John Patton, who is also Keybridge’s company secretary, declined Mr Khan’s request.

“Aurora understands that Bentley and Scarborough wish to withdraw their respective acceptances into the ADIT bid. Having considered this matter, Aurora hereby advises … that it declines these requests,” Mr Patton said in a letter sent to Bentley on May 29.

This enraged Mr Khan. “Bentley is unable to comprehend any sensible basis for Mr Patton’s statement on behalf of Aurora given the fact that Bentley has already withdrawn its inadvertent acceptance into the (Aurora) takeover bid under the CHESS settlement system,” Mr Khan said in his own ASX statement. “Bentley’s withdrawal is in accordance with specific, unambiguous and clear Takeovers Panel’s orders which, because of the declaration of unacceptable circumstances in relation to the (Aurora) bid, clearly and plainly have granted withdrawal rights to any party that accepted into the (Aurora) bid.”