ASIC launches legal action against battery developer

Corporate watchdog ASIC has launched Federal Court proceedings against the company behind a proposal for a 18GWh lithium-ion battery factory in Townsville. The civil penalty proceedings against Magnis Energy Technologies allege the company failed to disclose material information about its 'flagship' lithium-ion battery manufacturing facility in New York. ASIC is also suing Magnis executive chairman Frank Poullas for his involvement in Magnis’ alleged disclosure failures and for alleged breaches of his director’s duties. "Continuous disclosure obligations are critical to the fair and efficient functioning of Australia’s financial markets and directors must ensure their companies comply with the continuous disclosure regime," ASIC chair Joe Longo said. "In this case, we allege that Magnis and its executive chairman, Frank Poullas, failed on both counts, leaving the market materially uninformed and investors unaware that Magnis’ battery factory was in a parlous state, both financially and operationally.” In a shareholder update this morning, Magnis said it would examine the statement of claim in conjunction with its legal advisers and keep the market informed as required. ASIC’s case concerns Magnis’ lithium-ion battery plant in Endicott, New York, operated by US company Imperium3 New York (iM3NY). Magnis currently holds a majority stake in iM3NY. ASIC alleges that Magnis became aware that claims it had made about the iM3NY battery plant’s funding, automation of battery cell production and ability to produce cells at a rate of 1 gigawatt hour (GWh) per year – equivalent to approximately 10,000 cells per day – were incorrect and that it breached continuous disclosure laws by not disclosing this information in a timely manner. The plant was struggling to produce 300 battery cells per day in early 2023 using primarily manual, high cost and slow production processes, ASIC states. ASIC alleges that in failing to disclose information about the true situation at the battery plant in ASX announcements in 2021 to 2023, Magnis and Mr Poullas engaged in conduct that was misleading or deceptive, or likely to mislead and deceive. Related: Townsville battery factory plans lose spark Imperium3 Townsville (iM3TSV) - with Magnis Energy Technologies as one-third owner - was behind a proposal for a $3 billion North Queensland lithium-ion battery plant, with a site earmarked at Lansdown outside Townsville. In late 2022, Townsville City Council revoked its original allocation of land in the Lansdown development and offered iM3TSV the opportunity to reapply for an alternate site. "At this point in time, Magnis has decided not to pursue an alternate site at the Lansdown development, as there are no sites that meet our requirements,” the company stated in early 2023. "Magnis are instead considering other options for the location of its Australian gigafactory.” ASX suspension continues The ASX suspended Magnis securities from quotation in December last year. In its quarterly report today, Magnis said ASX communications with the company since then had principally related to its indirect majority interest in the Imperium3 battery plant, recent changes in the governance of Imperium3 and the company’s ability to meet its disclosure obligations. 'Based on those communications, and as previously advised, ASX has determined that it is not satisfied that the company is currently able to comply with its obligations under Listing Rules 3.1, 12.1 and 12.5,' Magnis reported. The ASX has determined that Magnis must demonstrate that it is willing and able to comply with listing rules before it can be reinstated.

ASIC launches legal action against battery developer

Industry Queensland

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