The Takeovers Panel has frozen shares in Merlin Diamonds held by the family of bankrupt mining magnate Joseph Gutnick, New York investment fund Regals and others after allegations of collusion at a shareholder meeting in September.
At stake is control of Australia’s second-largest diamond field, the Merlin project in the Northern Territory, which has previously been mined by Ashton Mining and Rio Tinto.
The freezing order affects about 30 per cent of Merlin’s stock, according to Bloomberg data.
Despite a minority revolt, led by Melbourne businessman Howard Rabinowitz, shareholders at the meeting voted to issue convertible notes and options accounting for as much as 37 per cent of Merlin to two companies associated with Mr Gutnick’s son Mordechai — Chabad Properties and NRMZ.
However, the meeting voted not to grant notes and options representing almost 21 per cent of Merlin to the company’s largest shareholder Regals Fund, which owns 13.8 per cent and is run by hedge fund operator and philanthropist David Slager.
Minority shareholder Tom Reddicliffe, a mining engineer who has a long association with the Merlin project, complained to the Takeovers Panel on October 31, alleging a breach of the Corporations Act because “several parties were associated and acting in concert in relation to the shareholder approvals” at the meeting.
The panel on Tuesday froze Merlin shares belonging to Joseph Gutnick, who owns 11.9 per cent of the company, Mordechai Gutnick, Royals, NRMZ, Chabad Properties and two other Mordechai Gutnick vehicles — Atlantic Holdings (Aus) and Great Central Gold.
The panel also froze the holdings of wife Stera Gutnick’s company Mazil and Trinity Management Group, which holds 3.3 per cent as trustee of Merlin’s employee share plan. As trustee, Trinity takes its instructions on how to vote shares from members of the plan. The order, which prohibits selling the shares or borrowing against them, will remain in force for two months or until further order.
