Andrew Price has been ordered to hand over a trove of documents as Paperlinx investigates whether its former chief executive misused confidential company information.
Price and fellow ex-director Michael McConnell must give Paperlinx any documents that discuss the paper merchant’s finances or share structure with any third parties or each other.
The Federal Court order covers information about ‘the quantum, nature and terms of financing arrangements between companies in the Paperlinx group’, the alleged breach of agreement with hybrid shareholders, and any conversion of hybrid shares into ordinary shares.
[Related: The ups and downs of Paperlinx]
Despite getting the order it wanted Paperlinx has to pay Price’s legal costs, which he says are ‘tens of thousands of dollars’.
“All they had to do was ring up and ask me and I would have put their mind at ease. Instead, they decided to take the most costly route available,” Price says.
“As a top ten shareholder, I'm deeply disappointed at the amount of money being spent on this and other legal cases that could have been better spent on putting some stock on the floor or paying decent wages.”
“After all, we've recently had a strike in Victoria and the amount spent, just on this case, could probably have paid for years' worth of salary increases.
Paperlinx is also investigating whether there is a contract or agreement between Price and Sydney investment bank Lusona Capital regarding the conversion of hybrid shares.
Price must disclose discussion with Lusona about any agreement about the conversion of hybrid shares, any financial benefit payable to him in connection with it, and any document that mentions an agreement between Lusona and other hybrid shareholders.
If the former directors are found to have disclosed anything, Paperlinx could argue it has grounds to sue them.
“The company has been successful in the request and the court has granted orders to proceed – this means that discovery in relation to any misuse of confidential company information can now commence,” a Paperlinx spokesman told ProPrint.
ProPrint understands Paperlinx is concerned by some of the information hybrid shareholder Blue Pacific is basing its breach of agreement claim on, and the content of other letters.
The court order specifically mentions Blue Pacific and fellow New York hedge fund Coastal Investment Management.
Blue Pacific told ProPrint it does not possess any confidential information and each letter it wrote has strictly relied upon information widely available to the general public.
[Related: See you in court!]
Price further criticised the board for not focusing on the company following the $300m collapse of its European operation, saying a number of customers and stakeholders want the board to resign.
“I'm not sure if the strategy is to sue their way to profitability, but may I respectfully suggest that having a good product at a good price and looking after your staff is a more proven strategy and one you should adopt immediately,” he says.
“I care about the future of Paperlinx because, as a top ten shareholder, it is my money being spent.
“We have an excellent chief executive backed by a great management team, who are doing a great job in a very tough market.
“It must be very demoralising to have to fight for every dollar, continually cut costs only to see hundreds of thousands of dollars spent in courts.”
Paperlinx counters saying the court costs were ‘modest and justified’ and that it has received no complaints from customers about the board.
The court action runs parallel with Price’s lawsuit over his dramatic sacking in February, which is back in court on November 2.
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