Otago diatomite miner and manufacturer Featherston Resources
has been thrown a lifeline from administration, but its new
financial backing means most historical shareholders will be
left out of pocket in their $15 million investment.
It is understood separate shareholder groups in New Zealand
and Australia are exploring legal options, with some hearings
having already taken place in the Supreme Court of New South
Wales, in Sydney, and more to come.
At the heart of the matter is who now takes control of the
diatomite asset, mined at Middlemarch and processed at a $1
million plant on the Taieri Plain.
While up to $15 million had been poured into the venture by
more than 200 shareholders since 1997, and, on launching
almost three years ago, there were expectations of turning
over $9 million a year, the company's revenue for the past
two financial years from sales has been a paltry $100,000.
Auckland-based administrators Rodgers Reidy had estimated
creditors were owed more than $A4 million ($NZ4.23 million).
At a meeting last Thursday, creditors voted to accept an
offer by Malaysian-backed Plaman Group, of up to $A4.8
million; which covers creditors' claims, an outstanding debt
of convertible notes and essentially represents a takeover of
The administrators from Rodgers Reidy were unavailable for
comment after the creditors' meeting, but a shareholder was
contacted and said the $A4.8 million Plaman Group offer had
been accepted, of which only about $A100,000 was set aside to
buy out the historical shareholders' stakes.
''It's nothing really. New Zealand shareholders are talking
now and looking at their [legal] options,'' said the
shareholder, who asked not to be identified.
In what appeared to be an 11th-hour petition,
Australian-based shareholders made an unsuccessful bid in the
Supreme Court in Sydney on Friday to have Plaman's offer set
aside, because of information in the administrators' report.
The New Zealand shareholder said there was a variety of
issues and claims of concern to be considered, some of which
centered around the earlier convertible notes issue.
In September 2012, FRCN Pty Ltd loaned Featherston about
$A1.72 million, in convertible notes, and was granted a
charge over all Featherston's assets.
The loan, a total cost of $A2.06 million, was due for
repayment in September 2013. In a supplementary report, the
administrators noted that on December 13, 14 shareholders,
representing about 12.5% of Featherston's share capital,
started proceedings against several parties, including some
Featherston directors and FRCN Pty Ltd.
The shareholders are seeking to have the convertible note
deed overturned. It is understood the case is to come before
the Supreme Court in Sydney, in February.