Consmin to sue manganese miner over dual listing plan

THE manganese miner OM Holdings has returned fire after its biggest shareholder said it would take legal action to stop a $500 million capital raising.

By InvestSMART · 16 Apr 2011

By InvestSMART ·
16 Apr 2011

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THE manganese miner OM Holdings has returned fire after its biggest shareholder said it would take legal action to stop a $500 million capital raising.

Gennadiy Bogolyubov, the president of Consolidated Minerals, which owns 11.4 per cent of OM Holdings, released a statement this week accusing OM Holdings of not properly disclosing the issue or its plans to list in Hong Kong.

Mr Bogolyubov's objections include a view that the listing would dilute the shares and continue a track record of poor corporate governance and disclosure.

OM Holdings released a letter accusing Consmin, a fellow manganese producer, of being the only shareholder with a grievance.

The chairman of OM Holdings, Low Ngee Tong, wrote: "The additional information that you have requested seems to be of specific interest to you.

"We have not received any request for further information from any other shareholder, including in relation to the specific details of Hong Kong laws, rules and regulations that may apply to them."

Mr Low did not specifically address Mr Bogolyubov's objections about a dilution of shares after listing in Hong Kong.

However, he said a dual listing would expose OM Holdings to new capital markets, including mainland China.

Consmin urged shareholders to call for an overhaul of the OM Holdings board to improve transparency.

OM Holdings is due to hold its annual meeting in Singapore on Wednesday. News of the dual listing plan was disclosed on March 28.

"Make no mistake, as we see it, OMH is run by the board and for the board and we are not going to watch minority shareholders be significantly disadvantaged yet again," Mr Bogolyubov said.

"Consmin is currently preparing legal action to prevent OMH from dealing with the proposed resolutions for the issue of shares, approval of the employee option plan and changes to the bylaws."

OM Holdings shares fell 2.5?, or 1.96 per cent, to close at $1.25.

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Frequently Asked Questions about this Article…

What is the dispute between Consolidated Minerals (Consmin) and OM Holdings about?

The dispute centers on OM Holdings' plan for a roughly $500 million capital raising and a proposed dual listing in Hong Kong. Consolidated Minerals, which owns 11.4% of OM Holdings, says OMH did not properly disclose the plans and is preparing legal action to stop the capital raising and related resolutions.

Why is Consolidated Minerals threatening legal action against OM Holdings over the dual listing?

Consmin's president, Gennadiy Bogolyubov, says the dual listing and capital raising were not properly disclosed and could dilute existing shares. Consmin also cited concerns about OM Holdings’ corporate governance and disclosure practices as reasons for seeking legal action.

How much of OM Holdings does Consolidated Minerals (Consmin) own?

Consolidated Minerals owns 11.4% of OM Holdings, making it the company’s largest shareholder involved in this dispute.

What has OM Holdings said in response to Consmin’s objections about the Hong Kong listing?

OM Holdings, via chairman Low Ngee Tong, said Consmin appears to be the only shareholder with a grievance and noted it had not received similar requests for further information from other shareholders. The chairman did not directly address dilution concerns but said a dual listing would expose OMH to new capital markets, including mainland China.

What specific company actions is Consmin trying to prevent with its legal challenge?

Consmin is preparing legal action aimed at preventing OM Holdings from proceeding with proposed resolutions related to the issue of new shares, approval of an employee option plan, and changes to the company bylaws.

Is Consmin calling for any changes at OM Holdings beyond legal action?

Yes. Consmin has urged OM Holdings shareholders to call for an overhaul of the OMH board to improve transparency and address the governance and disclosure issues raised by Consmin.

When was the dual listing plan disclosed and when is OM Holdings’ annual meeting?

News of the dual listing plan was disclosed on March 28. OM Holdings was due to hold its annual meeting in Singapore on the Wednesday following that disclosure, according to the article.

How did the market react to the dispute between Consmin and OM Holdings?

Shares in OM Holdings fell about 2% (reported as a 1.96% decline) amid the dispute, closing at $1.25.