UK hedge fund Bell Rock failed to disclose it was a substantial holder of Whitehaven Coal shares to the market for more than a year, according to the Takeovers Panel, amid a pitched battle over the future direction of the Australian coal miner.
The Takeovers Panel on Wednesday gave Bell Rock a slap over its conduct in campaigning against Whitehaven Coal’s acquisition of BHP’s Queensland coal mine, finding the UK investor failed to properly disclose its full interest in Whitehaven shares.
The panel released its findings late on Wednesday, saying it had made a declaration of unacceptable circumstances in regard to Bell Rock’s conduct.
Bell Rock held more than 5 per cent of Whitehaven shares as early as mid-2022 through derivative swap instruments, according to the panel, but failed to disclose its position to other shareholders.
“Between 10 June 2022 and 30 October 2023, Bell Rock’s undisclosed long position changed by at least 1 per cent on several occasions, reaching 13.041 per cent on 30 June 2023 (including a 4.774 per cent relevant interest in Whitehaven shares),” the panel said on Wednesday.
“The holders of shares in Whitehaven did not know the identity of persons who acquired a substantial interest in Whitehaven and were not aware of the extent of Bell Rock’s economic interest in Whitehaven and the acquisition of control over voting shares in Whitehaven has not taken place in an efficient, competitive and informed market.”
Whitehaven had sought to prevent Bell Rock from voting its shares at the company’s annual shareholder meeting, but the Takeovers Panel refused to intervene ahead of the meeting.
But its initial decision became largely irrelevant, however, when Bell Rock won support of more than 40 per cent of shares voted at the meeting for its push to reject Whitehaven’s remuneration report – well above the 25 per cent threshold needed to trigger a first strike.
Managing director Paul Flynn also saw a 38.5 per cent shareholder rebellion against the issue of about 534,000 shares, part of the company’s new executive incentive plan.
The panel ordered Bell Rock to give a “corrective notice” to Whitehaven and the ASX.
The Takeovers Panel did not specifically refer the matter to the Australian Securities and Investments Commission for further investigation and potential action.
The findings include noting that Bell Rock told Whitehaven on July 7 – a week after its total interest crossed 13 per cent, including derivative instruments – that it “is not, and has not
been, a substantial holder and no disclosure of its current interest is required”.
Shortly after Whitehaven’s October 26 shareholder meeting Bell Rock dumped the vast majority of its direct shareholding, selling down about $260m worth of the company’s shares, telling the market it now held and interest in only 5.3 per cent of the company’s stock – including direct ownership of 0.6 per cent of Whitehaven’s register.
On November 10 Bell Rock told the ASX its total position had fallen below 5 per cent of Whitehaven shares.
Bell Rock launched its campaign against Whitehaven’s remuneration report after failing to pressure the company to return its $2.65bn cash pile to shareholders rather than close a $US3.2bn coal mine acquisition from BHP. It argued changes made to Whitehaven’s management bonus scheme incentivised risky acquisitions rather than shareholder returns.
Whitehaven closed up 13c to $6.99 on Wednesday.