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HSBC said Broome and Austin had failed to deliver on Endocoal’s 2010 prospectus claims that it would use $15 million of funds raised in the initial public offering on all 10 of its Queensland tenements.
By June 2011, an additional $15 million was raised at a 35% discount to the IPO price despite the company not meeting IPO goals, HSBC said.
“The requisitioning shareholder's case for board changes is that the IPO goals have still not been met, with half of the tenements still remaining to be explored in spite of two significant capital raisings post the IPO,” HSBC said.
“The requisitioning shareholder has completely lost confidence in Messrs Broome and Austin as directors and seeks shareholders’ support to remove them from office so that the remaining board members can seek replacement directors with appropriate experience in finance and governance to ensure that shareholders’ interests are better represented.
“The requisitioning shareholder believes that the remaining board members will provide sufficient continuity and support for the current managing director to continue the company's business without disruption.”
Endocoal rejected the allegations and advised shareholders not to support the HSBC resolution.
“The directors unanimously recommend that you vote against the resolution for the removal of Rodney Austin,” the company said in a statement.
“The directors believe that the resolution will be detrimental to shareholder value and disruptive to the development of Endocoal and the corporate process announced in April 2012.”
Endocoal continued to receive unsolicited approaches throughout the 2012 second-quarter, after non-binding proposals to take over the company late last year failed to materialise.
In April the board appointed Macquarie Capital to assist reviewing new approaches and investigate other means to “deliver an outcome that will maximise value for shareholders”
“Discussions with these parties continue and Macquarie is currently in active dialogue with them to determine if a transaction can be progressed that is accretive to shareholder value,” it said.
