Padbury directors banned

PADBURY Mining chairman Terence Quinn and managing director Gary Stokes have been banned over a misleading funding announcement in 2014.
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Kristie Batten

The Federal Court in Perth on Friday banned the pair from managing corporations for three years and fined them each $A25,000 for breaching their disclosure duties.

They also have to pay $200,000 towards ASIC’s costs in pursuing the case.

On April 11, 2014 Padbury announced it had secured $6 billion in funding to build the Oakajee port and rail project in Western Australia.

The announcement pushed Padbury shares up by over 150%, but was vague and raised questions which forced the company into suspension.

The deal with Superkite and Alliance Super Holdings was scrapped later that month following investigations by ASIC and the Australian Securities Exchange.

Padbury later admitted the original announcement had not been reviewed by external legal counsel.

ASIC alleges the announcement was misleading because the funding agreement was subject to conditions precedent that had not yet been met.

The conditions precedent required Padbury to secure around $1.3 billion in demand guarantees.

The judgement was handed down on Friday after the parties submitted an agreed statement of facts to the court.

In handing down his judgment, Judge Antony Siopis  said, “the making of the declarations [of breach] serves to vindicate ASIC's claims that the defendants have engaged in contravening conduct and … serves to deter other corporations and directors from engaging in unlawful conduct”.

He added that the conduct of the two directors “was a serious departure from the standards expected of directors of a public company in a like situation”, and that they had recognised this.

“It is crucial to the maintenance of confidence in the Australian market that company directors ensure announcements made by their companies are not misleading, and contain all material information relevant to investors' assessment of deals being announced,” ASIC Commissioner John Price said.

“In this case the omission of significant conditions precedent and the identity of the funder were held to constitute breaches of the laws applying to listed companies.”

Padbury has named shareholder Edward Saunders as non-executive chairman and financial planner Michael Keemink as a director.

Shares in Padbury have been suspended since December 2014 over lack of funding.