El Misti Gold Ltd -
Freelance investor faces $385,000 suit
El Misti Gold Ltd EMG
Shares issued 21,324,643 1998-07-28 close $0.24
Tuesday Jul 28 1998
by Brent Mudry
COMPANY SECRETARY KNEW NOTHING OF SPECIAL DEBT DEALS
Stock promoter Zip Dhanani faces an intriguing $385,000 suit involving a shares-for-debt settlement of El Misti Gold. In an endorsed writ of summons filed Monday in the Supreme Court of British Columbia, Roscoe Postle Associates claims the North-Vancouver based promoter, doing business as Oslo International Investments, reneged on a mid-April agreement to pay $385,313 for a block of 308,251 shares. The Toronto-based mining and geological engineering company claims it delivered the shares to Mr Dhanani, but he has refused or neglected to pay for them so far. A full statement of claim has not yet been filed.
Roscoe Postle received its El Misti shares in a debt settlement at 30 cents a share, then sold them at $1.24 to Mr Dhanani with two-month payment terms. El Misti shares soared from 30 cents to $2.10 this spring, coinciding with a flood of newly-printed cheap stock. The shares have fallen from $1.50 in early June to 24 cents on Monday. The court action comes a year and a half after another suit revealed intriguing dealings in El Misti's first major promotion, which peaked at $8.40 in mid-1996.
The current suit traces back to mid-January, when El Misti confirmed it had reached agreements with creditors to settle $840,000 of outstanding debts by issuing up to 2.8 million shares at 30 cents a share. Roscoe Postle, owed $92,500, was the third largest creditor and was set to get 308,251 shares. El Misti ultimately settled $916,330 in debts by issuing 3.05 million shares, according to a form 20 filed by El Misti with the British Columbia Securities Commission on April 28. Two weeks earlier, on April 15, Roscoe Postle agreed to sell its 308,000 shares to Mr Dhanani and his company Oslo International for $385,000. The deal looked great for Roscoe Postle, at least at first, with its $92,600 overdue debt now worth $385,000, based on the $1.24-a-share arrangement with Mr Dhanani. (The stock had risen to $1.53 by this time, before peaking at $2.10 a week later.)
The no-money-down deal, confirmed in a written agreement, called for Mr Dhanani to pay Roscoe $311,700 on May 15 and $73,600 on June 15, according to the suit, filed by lawyer Michael Demers of Owen Bird. Roscoe Postle was unable to comment on its El Misti dealings. "We have a confidentiality agreement with these clients," says an assistant to William Roscoe. El Misti corporate secretary Nick de Mare says none of the creditors had any agreements to sell their shares, at least not officially. "There were none. . . I am not aware of any," the long-time Howe Street player told a reporter.
When asked about Mr Dhanani, Mr de Mare says he is just an investor. "He does not work for the company. . . he is someone that is following the company as an investor." . The company secretary says he had no clue about Mr Dhanani's Roscoe Postle deal until the Toronto firm called him recently.
It is not known if Mr Dhanani or any other promoters had similar deals with other El Misti creditors. "We have a sworn secrecy agreement with every client. . . I couldn't divulge any information with anyone, whether it was a penny or a million dollars," Jane Clements of Intertek Testing Services of Vancouver told Stockwatch. Intertek, the biggest creditor, received 1.03 million shares to settle its $308,800 El Misti overdue account. Had Intertek received the same deal as Roscoe, the value of its debt would quadruple to $1.27 million. "All employees sign a secrecy agreement. . . that would include management," added Ms Clements. The second-biggest creditor was Keith Dodd of Perth, Australia, who received 480,000 shares to settle a $144,000 debt. "To be honest I don't know the particulars" of any other deals involving Mr Dhanani, says Mr de Mare. Mr Dhanani could not be reached for comment.
The shares-for-debt settlement, involving 3.14 million shares, was just part of a flood of 18.51 million shares, fully-diluted, issued at 30 cents to 50 cents by El Misti this spring just before the stock surged from 30 cents to a high of more than $2. A series of private placements, originally proposed before last Christmas, closed in March and April. El Misti sold a $2-million (U.S.) debenture, convertible at 50 cents into 5.6 million shares, to Benitz & Partners. The London firm also bought one million special warrants, or two million shares fully-diluted, at 30 cents, also in March.
In a second debt issue, El Misti placed a $980,000 debenture with contractor Sedna Geotech, convertible into 3.26 million shares. The largest financing was an issue of 5.44 million special warrants, or 7.13 million shares fully-diluted, also at 30 cents. The biggest buyers were Andes Drilling of Peru, with 1.9 million units, and Catherine Edwards of Vernon, with 1.33 million units.
The Dhanani suit comes 19 months after a separate intriguing suit was filed by Dan Palikrousis against El Misti and its president Rob Slaughter. At the time, El Misti claimed the $1.5-million options suit was a private deal between the freelance investor relations worker and Mr Slaughter. (Mr Palikrousis, who then ran Smart Inventions, a telemarketing firm in the Toronto suburb of Etobicoke, also received finder's fees from three of Frank Lang's companies: Valerie Gold Resources, Cream Minerals and Emperor Gold.) Mr Palikrousis now does some sort of work for El Misti. The promoter received 300,000 options in a mid-May issuance of options on 2.44 million shares at $1.50. A BCSC filing shows Mr Palikrousis with a Vancouver address, but BC Tel has no listing for him or Smart Inventions in Greater Vancouver.
Another options filing, dated April 2, shows Mr Slaughter with an address in Australia, where his extended family is based, although he resides in Vancouver. It is not known whether the company president took advantage of the recent stock promotion to lighten his holdings, as Mr Slaughter's last insider filing was made in November.
(c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com
Mr Metals |
