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Tuesday 3 June 2014

14-121MR ASIC obtains extension of injunction freezing bank accounts of Sino Australia Oil and Gas Limited

ASIC has obtained orders in the Federal Court in Melbourne extending an injunction restraining Sino Australia Oil & Gas Ltd (SAO), an ASX-listed entity, from transferring company funds from two accounts it holds with HSBC Bank Australia Limited (HSBC).

ASIC initially obtained an injunction on an urgent basis on 13 March 2014 following concerns that SAO was about to transfer $7.5 million – representing almost the entire cash held by SAO in Australia – to bank accounts in China for purposes that were not disclosed, or not properly disclosed, in SAO’s prospectus documentation during an initial public offering. That injunction was extended by further orders made by consent on 18 March 2014, 8 April 2014 and 23 May 2014 against SAO, HSBC, Mr Tianpeng Shao (SAO chairman and executive director) and Mr Ruiyu He (SAO non-executive director).

In May 2014, ASIC’s investigation expanded into other concerns, including a concern that SAO’s recorded net profit for the period to 31 December 2013 was approximately 40% less than that forecast in its prospectus documentation (including a third supplementary prospectus that had been issued by SAO on 25 October 2013).

Following a contested hearing on 29 May 2014, Justice Davies ordered the extension of the injunction until 4 pm on 28 August 2014 with a further hearing set down at 9.30 am on 25 August 2014. Justice Davies also ordered that SAO be permitted to use a maximum of $673,255.58 in order to pay claims made on SAO by Australian-based trade creditors.

In making the orders Justice Davies said that it was necessary or desirable to extend the injunction in order to protect the interests of the investors and for the preservation of SAO’s assets in Australia.

Background

SAO is the Australian holding company of a Chinese operating company providing specialised drilling services to the oil and gas industry.

SAO was listed on the Australian Securities Exchange Limited (ASX) on 12 December 2013 after raising nearly $13 million under the IPO.

The prospectus documents presented by SAO to prospective investors comprised of a:

  • prospectus dated 28 February 2013

  • replacement prospectuses dated 3 and 26 April 2013

  • supplementary prospectus dated 26 July 2013

  • second supplementary prospectus dated 9 August 2013, and

  • third supplementary prospectus dated 25 October 2013.

Ms Heyan Wang, a former SAO non-executive director, was a respondent to ASIC’s urgent application and was subject to the orders made on 13 March 2014 and 18 March 2014. Ms Wang resigned as a director of SAO on 20 March 2014 and was not subject to orders made on 8 April 2014 and thereafter.

Last updated: 03/06/2014 12:00