Saved From Sale: Opes Victims Get More Time

Sydney Morning Herald

Saturday April 12, 2008

Vanda Carson

A MALAYSIAN steel maker and the managing director of a small Perth mining company were successful yesterday in their joint attempt to prevent ANZ Bank from selling shares the bank seized from the collapsed stockbroker Opes Prime.

The assets in question are steel maker Melewar's stake in iron ore miner Gindalbie, and shares in Conquest Mining that the managing director says are still his.

After a two-day hearing, NSW Supreme Court Justice William Windeyer agreed that the bank must continue to hold the shares until next Wednesday, when he will decide if their case deserves a full hearing and whether it will be transferred to Melbourne's Federal Court to join other Opes Prime cases.

A transfer to Melbourne appears unlikely.

Melewar says it owns 32 million shares, representing 14.5 per cent of Gindalbie's capital, of which nearly half was held through a lending agreement with Opes Prime that was initiated last October.

The court heard that the 32 million shares went to Opes Prime's financiers, ANZ, Merrill Lynch and Dresdner Bank. ANZ owns 8.5 million of the shares.

After Opes Prime failed to meet its obligations on loans totalling $1 billion, the banks took possession of a $1.6 billion share portfolio and began selling it. ANZ is the only bank still in possession of the shares.

The managing director of Conquest Mining, John Terpu, told the court that he and his superannuation fund had 15.3 million shares, which were put up as collateral for a margin loan.

Melewar and Mr Terpu want ANZ to hold the shares until the case is over, something ANZ says is not necessary.

The case hinges on whether Melewar and Mr Terpu understood they were handing ownership of their shares over to Opes Prime when they signed agreements to apply for margin loans, or whether they were misled.

Melewar and Mr Terpu argue Opes Prime misled them, but ANZ insists that the transfer of control of the shares to Opes Prime was clear from the documents they signed.

Melewar said the monetary value of the shares is not the only thing at stake, but that if it lost control of the shares, a rival steel maker could gain control of the strategic stake in a potential iron ore supplier.

Mr Terpu said if he loses control of his stake a rival shareholder, Gold Fields Australasia, could gain a seat on the board and withdraw from a $50 million drilling joint venture.

If the case is allowed to continue, they are expected to ask the court for a damages payment to compensate them for the difference between what they owed Opes Prime on their loans and what it would cost them to repurchase their stakes at current share prices.