Does a US$728 million financing deal for an abandoned coal mine, a group of South Korean businessmen and a falsified mineral survey report lie behind the problems at Hong Kong listed Siberian Mining Group (SMG).
Those are issues being considered by Hong Kong’s High Court in the latest in a series of shareholder-led legal actions against SMG management.
SMG itself, seven former SMG directors, global mining advisory group SRK Consulting, and Korean businessman Choi Sungmin, are all named as defendants in a writ that alleges shareholders were misled over the 2008 purchase of the Lapichevskaya coal mine in central Russia’s Kemerovo region, and the subsequent issuance of US$728m in convertible notes to the vendor as part of the purchase agreement.
The writ allegations are “false” and the situation is “very complicated,” SMG’s former chairman Lim Ho-sok told the South China Morning Post. Named as a defendant in the writ, Lim declined to comment further citing ongoing legal action.
The writ was filed November 5th by Charles Zhi, also known by his Korean name Chi Chang Hyun, a shareholder and one time consultant to SMG. The writ asks for shareholder compensation from the former directors and for the convertible notes to be repaid.
The Hong Kong stock exchange wrote to SMG earlier this year questioning whether the mine’s value had been properly reported in the annual accounts. SMG has yet to release its 2012 and 2013 annual reports and the firm is currently on its third set of auditors in two years.