Investors accuse Jervois Global of tearing up $1.6bn in value

The board and management of cobalt play Jervois Global have been accused of tearing up $1.6bn in shareholder value as they push ahead with a voluntary administration deal in the US.

The Jervois Global cobalt project in Idaho.

The board and management of cobalt play Jervois Global have been accused of tearing up $1.6bn in shareholder value as they push ahead with a voluntary administration deal in the US that will leave shareholders empty-handed.

Disgruntled investors are pushing for an emergency general meeting in Australia to head off the deal, with Jervois chief executive Bryce Crocker and other former Xstrata and Glencore high-flyers in the company’s manage-ment team firmly in their sights.

The investors are furious the ASX waived listing rules in January to clear the way for the $233.5m recapitalisation deal struck by Jervois to go ahead without shareholder approval.

It is estimated AustralianSuper, Jervois’s biggest shareholder with more than 23 per cent of the stock, stands to lose more than $100m in member funds. However, Australia’s largest superannuation fund is not part of the group seeking an emergency general meeting.

Jervois unveiled the recapitalisation deal with its major US lender, Boston-based Millstreet Capital Management, on January 2. Mr Crocker said at the time that he was disappointed for AusSuper and other shareholders who would be left with nothing.

Under the deal, Jervois will enter voluntary administration and become privately owned by Millstreet via provisions in Chapter 11 of the US Bankruptcy Code. Mr Crocker will stay on at Jervois under Millstreet ownership.

Jervois limped through 2024 on the back of loan waivers from Millstreet as cobalt prices plunged amid a big increase in production from Chinese companies operating in the Democratic Republic of Congo.

Jervois chief executive Bryce Crocker.

The company’s share price hit $1.02 in April 2022, giving it a market capitalisation of $1.6bn, but sank to by 1c by last August and never recovered. The high was achieved with cobalt prices at $US37 a pound compared to less than $US13 a pound during 2024.

Letters signed by shareholders representing more than 5 per cent of the Jervois register, or in excess of 136 million shares, were sent to the company secretary last week calling for the emergency general meeting.

They are seeking to put motions calling for a vote of no confidence in Mr Crocker and the board, termination of the recapitalisation deal with Millstreet and for the appointment of an administrator in Australia. In total the group speaks for about 9 per cent of the register, with BW Equities director Ben Kay one of the most fierce critics of the Jervois board and management.

Mr Kay said the recapitalisation deal unveiled in January was a slap in the face for shareholders who had been led to believe via company briefings in 2024 that Jervois was closing in on asset sales to salvage something from the wreck. He said shareholders had been left empty-handed under a deal that suited Millstreet because it could take the company private through a debt-for-equity swap, and those in management team who kept their jobs.

The debt-stricken company’s assets include a cobalt refinery in Finland, a high-grade cobalt deposit in the US state of Idaho, and a nickel and cobalt refinery in Sao Paulo, Brazil.

AusSuper came on board in 2019 when Jervois acquired the then part-built Idaho mine that is now in mothballs because of the cobalt price plunge.

The US Department of Defence is funding part of the maintenance costs at Idaho, and Jervois has been in contact with the US select committee on China regarding domestic price support for cobalt.

In a complaint sent to ASIC, disgruntled shareholders said they had raised concerns about Jervois finances long before the recapitalisation deal with Millstreet. “Shareholders have questioned management as early March 2024 as to how Jervois was going to meet its debt covenants and whether the company was trading while insolvent. At this time Chinese cobalt producers had flooded the market causing the cobalt price to collapse, and Jervois share price to fall to an all-time low,” the letter states.

Both ASIC and the ASX have acknowledged receiving the complaints, which accuse Jervois of numerous missteps since April 2022. In response to the claims levelled at the board and management, Jervois told The Australian it had tried to sell assets and looked at other ways of saving the company to the benefit of shareholders.

“Jervois undertook significant diligence and negotiations with third parties, stakeholders and Millstreet in relation to the proposed recapitalisation of the company’s balance sheet extending to potential partnerships including joint ventures, sale of its assets and or injections of equity capital into either its assets or the company,” a spokesman said

“Due to several factors including the current cobalt price which is, in real terms, at all-time lows, these negotiations did not result in a transaction that allows Jervois to recapitalise its group balance sheet on terms more favourable than those provided in the restructuring support agreement (with Millstreet).”

Mr Crocker said in January: “With the benefit of hindsight, we took on too much debt and once China flooded the market and cobalt prices fell significantly, we had a problem with a lender.”

Originally published as Investors accuse Jervois Global of tearing up $1.6bn in value