Court freezes Chinese firm’s Australia accounts as Asic probes IPO
PERTH (miningweekly.com) – A court injunction against China-based Sino Australia Oil and Gas prohibiting the company from using any of the money in its Australian accounts has been extended until the end of August, while the Australian Securities and Investment Commission (Asic) investigated the company.
In March this year, Asic launched an investigation into Sino Australia, stating that the company had not properly disclosed its use of funds raised in a 2013 initial public offering (IPO).
Asic has expressed concern that the prospectus issued on a recent capital raising did not clearly set out the intended use for the funds raised, as well as a variance between actual profit and forecast profit for the year ended December 2013.
Sino Australia said on Wednesday that the company did not consider that there was anything unclear in the offer documents of the recent capital raising, pointing out that it had told Asic that the funds would be used to purchase equipment in China.
Furthermore, the Chinese firm noted that the variance between the profit forecast and the actual profit reported for 2013 resulted from the assumption that the capital raising would have been completed by July that year, and that two additional pieces of drilling equipment would have been purchased allowing the company to be more profitable.
Sino Australia warned that the court injunction would have the effect of the company not being able to meet its payment responsibilities for the drilling equipment, which could result in contractual risk with the supplier, which would include the payment of penalty sums.
The ASX-listed company said that it was in discussions with its supplier, and all options to complete the equipment purchases were being explored.
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