Legal action launched against company bidding for Austock takeover

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ASIC has launched legal action and against a corporation and its current and former directors who were proposing a takeover bid of a major financial services company.

Legal action against Mariner Corporation Limited (Mariner) and its current and former directors follows the company’s proposed takeover bid for listed financial services company Austock Group Limited (Austock).

ASIC’s civil penalty proceedings in the Federal Court of Australia are against Mariner, its chief executive and managing director Darren Olney-Fraser, current director Donald Christie and former director Matthew Fletcher.

ASIC’s concerns relate to an announcement Mariner made to the market on 25 June 2012 of its intention to make a takeover bid for Austock.

ASIC alleges that:
  • Mariner was reckless as to whether it could perform its obligations under the proposed bid because it did not have the financial resources to fund the bid or any commitment or assurance from another party to fund the bid at the time of the announcement.
  • The announcement was misleading because the proposed bid was at a price less than Mariner was permitted to offer and because it misled the market as to Mariner’s ability to fund the bid.
  • The directors breached their duties by failing to give sufficient consideration to the steps that needed to be taken before making the announcement.

ASIC raised concerns with Mariner about its funding of the takeover at the time the bid was announced.

The proceedings are listed for a directions hearing in the Federal Court of Australia in Melbourne on 12 May 2014.

In February an article about Austock Life appeared in Wealth Professional.

At the time Richard Atkinson, the head of IFA product and relationships, encouraged financial advisers with clients thinking about moving to aged care to move quickly to avoid new fees and stricter income treatment.