Penrice investors wants govt investigation
A former major shareholder in failed SA chemical manufacturer Penrice wants a government investigation into the company’s collapse.
Sydney-based investment group London City Equities, which once held 9 per cent of Penrice, made the call in its annual report issued today.
All companies in the Penrice Group were placed into liquidation following a creditors’ vote on July 31.
The Osborne chemicals group went into administration on April 11 this year with an estimated $200 million in debt.
LCE Chairman Peter Murray told shareholders LCE lost more than $6 million during its troubled relationship with Penrice, now in liquidation.
“We are determined to pursue Penrice Soda logically where we lost over $6 million,” he said.
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“Information provided to investors in 2008 and 2009 has since been assessed by us as most unsatisfactory and our objective is to recover funds from implicated parties.
“In April 2014 Penrice appointed McGrath Nicol as Voluntary Administrators and that firm has now become the liquidators.
“From our sums it appears 3,500 shareholders have lost $130 million, the banks some $100 million and trade suppliers some $30 million in Penrice.
“We encourage a government investigation into this mess.”
In July, a report to creditors by administrator McGrath Nicol concluded that Penrice Soda Products Pty Ltd (PSP) was insolvent for six months before it went into administration – a claim denied by Penrice directors.
It said it will investigate payments made to some creditors in the six-month period prior to its appointment to determine whether “parties knew or had reason to suspect” that PSP was insolvent when payments were made.
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McGrathNicol partner Sam Davies informed the Australian Securities and Investments Commission of his concerns.
Davies told creditors at the July meeting that McGrathNicol believed Penrice was already insolvent on July 1, 2013, because banking facilities with National Australia Bank and Westpac were already fully drawn and cash-trading losses were being incurred.
Former chairman David Trebeck issued a statement at the time saying: “The directors greatly regret that Penrice is being wound up.”
Trebeck and his fellow directors were targeted as long ago as 2011 by LCE when it launched a bid to topple the board at the 2011 annual general meeting.
At the time LCE held 5.2 per cent of Penrice shares, having sold down its holding after Penrice advised the Stock Exchange of its intention to increase borrowings in the face of unexpected losses.
“We sold the shares to raise money to fund legal expenses in taking on the board,” LCE’s chief operating officer Peter Murray told InDaily at the time.
“We feel we have been banging our heads against a brick wall; every time Penrice makes an announcement it’s another horror story with the promise that things will get better.”
Murray said that since Penrice listed on the ASX in 2005 it had lost around 90 per cent of its capital value.
That downward spiral is now complete.
In 2010 it gave notice of legal action to get a better look at Penrice’s books and it began beating the drum about the company’s poor performance.
“There are enough concerns for us to have a look,” LCE’s chief operating officer Peter Murray told InDaily in October 2010.
LCE won the right to inspect certain of Penrice’s books, but that process became bogged down in further legal action.
As early as 2009 LCE had flagged concerns about increasing debt at Penrice and sought board representation. That effort failed.
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