AUS: ASIC moves to protect IPO investors

On 28 November 2007, the Federal Court of Australia approved the terms of settlement, agreed to by all the parties to the proceeding, including a representative of the Warrenmang IPO investors. The payment is to come from the proceeds of the sale of a house previously owned by the Chairman of Warrenmang. Pursuant to the terms of settlement approved by the Order of the Federal Court of Australia: 1. Persons who subscribed to the Warrenmang IPO and paid application monies in the period from 12 December 2003 to 19 January 2004 and who have not had their application monies refunded in full may now have their application monies refunded in full. A maximum of AUD170,000 has been set aside to meet claims made by these investors. 2. Persons who subscribed to the Warrenmang IPO and paid application monies in the period from 20 January 2004 to 8 July 2005 and who have not had their application monies refunded in full may be entitled to a partial refund of their application monies. A maximum of AUD135,000 has been set aside for distribution to these investors on a pro-rata basis. 3. The liquidator of Warrenmang, Colin Nicol of McGrathNicol + Partners will write to persons who he has identified as being persons who subscribed to the Warrenmang IPO and paid application monies in the period between 12 December 2003 to 8 July 2005 and who have not had their application monies refunded in full. 4. Any persons who do not make a claim to the liquidator within 30 days of the date of the liquidator’s letter will not be able to claim against the funds available for distribution to eligible Warrenmang investors. 5. Any persons who make a claim to the liquidator and whose claim is rejected by the liquidator will have a right of appeal to the Federal Court of Australia. Persons who subscribed to the Warrenmang IPO and paid application monies in the period between 12 December 2003 to 8 July 2005 and who have not had their application moneys refunded in full and who have not received a letter from the liquidator within 21 days should contact the liquidator as a matter of urgency and state their claim. Background This action arises out of ASIC’s ongoing investigation into Warrenmang. In October 2006, ASIC received complaints alleging that Warrenmang had not refunded all the application monies owed to subscribers following Warrenmang’s unsuccessful public float. Warrenmang was incorporated on 1 September 2003 as a vehicle to acquire wine businesses in Victoria. Warrenmang issued a prospectus in December 2003 to raise a minimum of AUD6 million with a view to listing the company on the Australian Stock Exchange (ASX). This prospectus stated that the funds raised would be used to acquire and consolidate various wine and vineyard businesses. Warrenmang failed to raise the minimum subscription and list on the ASX. In March 2004, a supplementary prospectus was issued to extend the offer period for a further three months. Warrenmang was again unsuccessful in raising the minimum amount and the planned public float never took place. The law requires that application money raised from subscribers to an IPO must be held in trust until the securities are issued or the money is returned to the subscribers. Following an application by ASIC, Warrenmang was placed into liquidation on 19 December 2006. On 29 June 2006, the Federal Court of Australia made further orders that Mr Robert Graeme Pritchard, the former Chairman of Warrenmang, had contravened the Corporations Act by failing to appropriately deal with the money raised by the IPO. ASIC’s ongoing investigation is not related to the Warrenmang Vineyard and Resort in Bendigo, Victoria.