Teeling company Connemara Mining should be wound up says shareholder
A SHAREHOLDER in a mining exploration company headed by entrepreneur John Teeling has asked the High Court to wind up the firm alleging it is insolvent and unable to pay its debts.
Connemara Mining, whose executive chairman is Mr Teeling, is opposing the winding up petition brought by UK mining finance company Trampus Ltd.
Connemara says it has not failed to pay any debts and also says Trampus cannot seek a winding up because it is not a creditor.
Ms Justice Mary Laffoy today said she would give her decision on the petition later.
Connemara was set up in 2006 to exploit zinc and other mineral mining opportunities in Ireland. It has obtained licences for a number of locations in Ireland and one of its subsidiaries, Limerick Zinc Ltd, has attracted investment from a Canadian company, Teck, to help exploit zinc reserves covered by the licences.
Trampus is the largest single shareholder in Connemara, holding 1.625 million shares or 6.32pc of the company while Mr Teeling is also a substantial shareholder, the court heard.
Mr Teeling, who also has a number of other mining business interests, is the founder of whiskey producer, Cooley Distillery, which was sold to an American spirits company over a year ago for €73m.
In its petition, Trampus says Connemara's financial position has been deteriorating and interim accounts for 2012 show it has liabilities of
€363,000 compared to assets and cash of €283,000, leaving it with a current deficit of €80,000.
Its inability to pay its debts was shown by a notification to shareholders last November that it was immediately ceasing to make payments towards the funding of Limerick Zinc under the terms of its joint venture agreement with Teck. This was in spite of previous assurances from directors that the company had sufficient funds to meet its obligations under that agreement until 2013, Trampus said.
Mr Teeling told investors at a meeting in London last November that the cash required to be invested in Limerick Zinc would not be recouped because the value of the project was less than the present value of any additional investment, Trampus claimed. This was despite a prior statement from Mr Teeling that the Limerick project was worth significantly more than what was reported on the company balance sheet, Trampus also claimed.
If Mr Teeling's statements are correct, then a write-down of the value of the company's investment would be required, further jeopardising its ability to pay off debts, it was claimed.
The value of the company's principal asset, Limerick Zinc, cannot be protected while the current managment and directors remain in place, Trampus said.
It also says there are pending legal proceedings against Mr Teeling and James Finn (Connemara's financial director) in Dallas County, Texas, USA, alleging they have been in breach of their fiduciary duties as directors of a US-registered company, Endeavour Oil and Gas Inc.
If the allegations against them are true, Trampus says it would lose confidence in them as directors.
In its opposition to the winding up application, Connemara's directors said Trampus has relied a distortion of a note in the company financial statements relating to preparing financial accounts on "a going concern basis".
Trampus' assertions were unsupported by any evidence and the company had a right from time to time to contribute to exploration budges, such as for Limerick Zinc, but had no obligation to do so.
As Trampus was not a creditor to Connemara, but a member of a class of fully paid up contributories to the company, it can have no financial interest in bringing a winding up petition on the grounds of inabilty to pay debts, it was argued.