Investor concern grows for gas explorer's future
Promises of a new project in the pipeline have done little to quell scepticism among embattled Minmet shareholders, writes John Reynolds
Published 01/05/2011 | 05:00
TWO years after a collapse in the value of their shares and after a complaint to the Serious Fraud Office (SFO) in London and the Office for the Director of Corporate Enforcement (ODCE), Irish shareholders in formerly AIM-listed, Dublin-based exploration firm Minmet Plc -- now called Aventine Resources -- remain understandably sceptical and very concerned about the fate of their investments.
Despite assurances from director John Liwosz early last week about a forthcoming shale gas deal for its remaining asset in the US that might return some of their cash in the future, the handful of shareholders who attended an annual general meeting in Dublin on Wednesday last remain haunted by various controversies that have surrounded the company since it was first set up by Charlie Haughey's son Conor and late former Aer Lingus chairman Bernie Cahill in 1998.
At one time, Minmet had a market value of £210m on hopes of big gold finds, but that was a distant memory by July 2008, when representatives of 6,000 British and Irish shareholders demanded answers about a highly complex money trail that involved dealings with the company's chairman, Peter Maddocks, deals with offshore companies, loans that couldn't be paid back and business dealings with South African businessman Leslie Greyling and his son Clinton.
In the past, as reported in the Sunday Independent in 2008, Charms Investments, founded by Clinton Greyling, was involved in the sale of a Tucumcari shale gas project in New Mexico and Mr Greyling received a €126,000 payment through an offshore company for a West African resources deal.
But there are concerns among shareholders that Leslie -- who pleaded guilty to a US stock fraud in the early 1990s and in 1997 pleaded guilty to a securities fraud in Florida -- is still linked to Aventine.
They are now battling to have two independent directors appointed, to give them a fairer say in what happens to their shareholdings, when they transfer to a stake in a newly formed US company that will develop Tucumcari to bring the gas wells into production, using a $30m (€20m) loan to Aventine.
They are also concerned that last year Aventine's board wanted to exchange all debt for shares in Trilliant Exploration, a US pink sheet (small stock) listed company that earlier this month could not even pay its audit fees.
Prior to this, the Aventine board announced a potential takeover by a US firm called Fox Petroleum, when its shares were trading at a dollar. Their value has since plummeted however, and they are now nine-tenths of one cent, according to concerned shareholders.
Earlier this week, Mr Liwosz told them that the ODCE would have preferred that the directors liquidate Aventine.
"In that case, the only people who would get anything would have been the former directors, though," he stated. Nevertheless, the shareholders fear that a similar fate awaits any shares they end up with in the newly proposed Tucumcari project deal. They point to the fact that the company's auditors, Deloitte and Touche, resigned in January, suggesting that the value of the Tucumcari project is questionable.
A newly appointed auditor, LHM Casey McGrath, was "unable to obtain sufficient appropriate audit evidence to enable us to form an opinion as to the appropriateness of . . . the value of. . . intangible assets [the Tucumcari project], investments in subsidiaries and group undertakings [loans]".
Mr Liwosz disagrees, however, pointing to fully validated reports by consultants Edison Research and Gaffney, Cline and Associates that support the project being valued at $68m.
"I'd like Aventine to be a future incubator of attractive prospects in the resources sector that could be floated off or sold to trade buyers, and hopefully we'd relist to benefit our shareholders," he said, having admitted that the company had recently received "a severe kicking by the authorities".
Whether this will instill confidence in shareholders like Dubliner Jim Wilson, who has invested "a substantial amount" in Minmet -- now Aventine -- through the years, remains to be seen however.
"What happened here in the past was very galling -- but I'd like the new director [Mr Liwosz] to earn my trust. I hope that my investment doesn't go down the pan again," he said bluntly.
Sunday Indo Business