Emma Weston and Timothy Goodacre. Photo by Peter McIntosh.
Litigation over the collapse of the privately owned
Taieri-based diatomite fertiliser company Featherston Resources
has been set down for a Supreme Court hearing in New South
Wales, in July.
Three years after launching its $1 million Dukes Rd
processing plant, after more than $15 million was invested by
more than 200 shareholders, Featherston was placed in
receivership, understood to be owing more than $5 million.
At the heart of the matter is the role of its directors
leading up to the company's collapse and a later bail-out
offer by another entity, Australian investment company Plaman
Group, which would take control of Featherston but leave
A bail-out $A4.8 million ($NZ5.2 million) offer by Plaman has
been accepted by creditors, which cedes control of
Featherston to Plaman.
Because Featherston is Australian-owned, a group of
disgruntled shareholders represented by Ashlaw Legal Services
in Sydney has been to the Supreme Court seeking redress, the
last hearing on March 10 ordering a two-day hearing be set
down for July 15.
Ashlaw Legal Services represents at least 11 shareholders,
with one client having committed up to $A400,000 for the
Ashlaw had itself made an unsuccessful bail-out offer for
Featherston which would have seen shareholder interests
diluted by about two-thirds.
In documents obtained by the Otago Daily Times, an ''amended
originating process'' outlines application details by Ashlaw
Cited as defendants before the March 10 hearing were
Featherston's managing director and director Emma Weston and
shareholders and directors Simon Kember and Timothy Goodacre,
plus Featherston and numerous subsidiary companies.
Ashlaw Legal Services is looking for ''final relief'' in a
declaration that Ms Weston, Mr Kember and Mr Goodacre and
others ''are liable to pay Featherston any profits,
alternatively damages and equitable compensation'', under
alleged breaches of the Corporations Act or ''general law and
fiduciary duties to Featherston''.
Ashlaw Legal Services wants the rescinding of a convertible
note deed - a $A1.72 million loan to Featherston by FRCN Pty
Ltd, which gained a charge over Featherston's assets - which
would be repaid by the Plaman Group offer. Plaman would in
turn own Featherston.
In a summary of the March 10 hearing, the shareholders sought
to amend their application to have more defendants included:
James Mollison, formerly director-elect and chief executive
of Featherston; Driftwood Capital Pty Ltd, Featherston's
mandated corporate adviser; and Plaman Group Pty Ltd, a
mandated adviser to Featherston and which became the
successful financial bail-out company.
Ashlaw Legal Services claims Mr Goodacre, Mr Kember, Mr
Mollison and Driftwood ''rejected or stymied'' numerous
investment offers or merger proposals, nor was any reference
made in the annual meeting notice for shareholders about any
''additional capital financing''.
Mr Mollison and Driftwood consented to being added as
defendants, but Plaman's counsel opposed inclusion, several
objections including that the New South Wales Supreme Court
did not have the jurisdiction, and New Zealand was the more
However, the judge granted the application, and Mr Morrison,
Driftwood and Plaman ''are all parties to the action''.
As with the other defendants, Ashlaw Legal Services seek that
same relief and declarations against Mr Morrison, Driftwood
and Plaman's activities.
While the fertiliser manufacturing plant has been advertised
as for sale, on March 10, the Supreme Court judge said,
''Existing orders restraining FRCN and its receiver from
taking any action to sell Featherston's assets were continued
until further order.''