Corporate regulator the Australian Securities and Investment Commission (ASIC) has approached the Takeovers Panel to prevent Andrew Forrest's Squadron Resources from increasing its interest in ASX-listed Poseidon Resources to nearly 61% without first gaining shareholder approval.
Poseidon last month announced a renounceable entitlement, fully sub-underwritten by Squadron, to raise about $68.8-million, as well as a placement to raise A$5.8-million.
Squadron participated in the placement, increasing its interest in Poseidon from 12.3% to 18.01% and has committed to take up all of its entitlement in the entitlement offer, which could potentially increase its voting power up to 60.96%.
“The control effect of the entitlement offer exceeds what is reasonably necessary for the fundraising purpose,” ASIC said in its submission to the Takeovers Panel and requested an interim order restraining Poseidon from issuing shares under the entitlement offer until the panel has made a ruling.
ASIC stated that it also wanted a final order that would prevent Poseidon from issuing shares to Squadron as sub-underwriter where it would result in the company’s voting power increasing above 20% without first gaining shareholder approval.
Poseidon said that the proceeds of the fundraising were meant for the restart of its Silver Swan and Black Swan mines, and bring the Black Swan processing plant back into production.
Last month, US private equity group Black Mountain terminated a takeover proposal for Poseidon because of the capital raising, which it believed was highly dilutive.