<p class="mb-5" id="contentDlCitation" hidden>[2000]DLHC6132</p> <div class="restriction-wrapper"> <div class="container-lg"> <div class="row"> <div class="col-md-12 restricted-content"> <div class="restricted-content-img-wrapper"> <div class="lock-icon bounce-7"> <img class="" src="https://www.dennislawgh.com/dl-assets/dl-images/lock-content.png" alt="Subscription based content"> </div> </div> <a href="https://www.dennislawgh.com/login" class="btn btn-primary btn-lg" style="font-family: 'open sans'; text-transform: capitalize; border-radius: 8px"> Login to Read Full Case </a> </div> </div> </div> </div> <main id="main" class="content" style="min-height: 60rem" ><span style="font-size: 18px !important;"><p class="MsoNormal" align="center" style="text-align:center;line-height:115%"><b><span style="font-size:12.0pt;line-height: 115%;font-family:"Book Antiqua","serif";color:#00B0F0">ADRYX MINING AND METALS LTD.<o:p></o:p></span></b></p><p class="MsoNormal" align="center" style="text-align:center;line-height:115%"><b><span style="font-size:12.0pt;line-height: 115%;font-family:"Book Antiqua","serif"">vs.<o:p></o:p></span></b></p><p class="MsoNormal" align="center" style="text-align:center;line-height:115%"><b><span style="font-size:12.0pt;line-height: 115%;font-family:"Book Antiqua","serif";color:#00B0F0">ASHANTI GOLDFIELDS COMPANY LTD.<o:p></o:p></span></b></p><p class="MsoNormal" align="center" style="text-align:center;line-height:115%"><span style="font-size:10.0pt;line-height:115%;font-family:"Book Antiqua","serif"">[HIGH COUR, ACCRA]<o:p></o:p></span></p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt; padding:0in 0in 1.0pt 0in"> <p class="MsoNormal" align="center" style="text-align:center;line-height:115%; border:none;mso-border-bottom-alt:solid windowtext 1.5pt;padding:0in; mso-padding-alt:0in 0in 1.0pt 0in"><span style="font-size:10.0pt;line-height: 115%;font-family:"Book Antiqua","serif"">SUIT NO. MISC. 32/2000 DATE: 9TH FEBRUARY, 2000<o:p></o:p></span></p> </div><p class="MsoNormal" style="text-align:justify;line-height:115%"><b><span style="font-size:12.0pt;line-height: 115%;font-family:"Book Antiqua","serif"">COUNSEL:<o:p></o:p></span></b></p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt; padding:0in 0in 1.0pt 0in"> <p class="MsoNormal" style="text-align:justify;line-height:115%;border:none; mso-border-bottom-alt:solid windowtext 1.5pt;padding:0in;mso-padding-alt:0in 0in 1.0pt 0in"><span style="font-size:12.0pt;line-height:115%;font-family:"Book Antiqua","serif"">MR. TONY LITUHR FOR APPLICANTS, WITH HIM MIRIAM BREW <o:p></o:p></span></p> <p class="MsoNormal" style="text-align:justify;line-height:115%;border:none; mso-border-bottom-alt:solid windowtext 1.5pt;padding:0in;mso-padding-alt:0in 0in 1.0pt 0in"><span style="font-size:12.0pt;line-height:115%;font-family:"Book Antiqua","serif"">MR. KWAME TETTEH FOR RESPONDENTS, WITH HIM MR. BEYUO, AMENUVOR AND FORSON<o:p></o:p></span></p> </div><p class="MsoNormal" style="text-align:justify;line-height:115%"><b><span style="font-size:12.0pt;line-height: 115%;font-family:"Book Antiqua","serif"">CORAM:<o:p></o:p></span></b></p><p class="MsoNormal" style="text-align:justify;line-height:115%"><span style="font-size:12.0pt;line-height:115%;font-family:"Book Antiqua","serif"">LORDSHIP R. K. APALOO J<o:p></o:p></span></p><div style="mso-element:para-border-div;border-top:solid windowtext 1.5pt; border-left:none;border-bottom:solid windowtext 1.5pt;border-right:none; padding:1.0pt 0in 1.0pt 0in"> <p class="MsoNormal" align="center" style="text-align:center;line-height:115%; border:none;mso-border-top-alt:solid windowtext 1.5pt;mso-border-bottom-alt: solid windowtext 1.5pt;padding:0in;mso-padding-alt:1.0pt 0in 1.0pt 0in"><b><span style="font-size:12.0pt;line-height: 115%;font-family:"Book Antiqua","serif"">RULING<o:p></o:p></span></b></p> <p class="MsoNormal" align="center" style="text-align:center;line-height:115%; border:none;mso-border-top-alt:solid windowtext 1.5pt;mso-border-bottom-alt: solid windowtext 1.5pt;padding:0in;mso-padding-alt:1.0pt 0in 1.0pt 0in"><b><span style="font-size:12.0pt;line-height: 115%;font-family:"Book Antiqua","serif""><o:p> </o:p></span></b></p> </div><p class="MsoNormal" style="text-align:justify;line-height:115%"><span style="font-size:12.0pt;line-height:115%;font-family:"Book Antiqua","serif"">The Applicants are in Court to invoke the jurisdiction of the High Court under the Companies Code 1963, Act 179 for the following reliefs: (1) An order for convening an extraordinary general meeting of the Respondent Company for the purpose of passing ordinary resolutions for the election of a new Board of Directors and the removal of the existing one. The extraordinary general meeting (hereinafter to be referred to as an EGM) if ordered, will consider a resolution under Section 202(1)(a) to permit the sale of all, or any of the Company's assets. (2) An injunction restraining the existing Directors of the Respondent Company from entering into any agreement, contract or understanding which may impair or substantially reduce the ability of any Board of Directors elected at the general meeting to deal with the Company's affairs as they might otherwise have chosen. (3) Consequential orders arising directly out of the reliefs sought. <o:p></o:p></span></p><p class="MsoNormal" style="text-align:justify;line-height:115%"><span style="font-size:12.0pt;line-height:115%;font-family:"Book Antiqua","serif"">The five Applicants whose addresses and number of shares owned by them were annexed to the application as Exhibit JCG1, claim they are the holders of 4,716,294 shares of the Respondent Company and that their total shareholding represent 4.2% of the 112,893,000 issued share capital of the Respondents. From Exhibit JCG1, it is clear that 1st and 2nd Applicants reside in Luxembourg, 3rd and 4th Applicants who bear the same or similar names reside in New York, USA and the 5th lives in Switzerland. <o:p></o:p></span></p><p class="MsoNormal" style="text-align:justify;line-height:115%"><span style="font-size:12.0pt;line-height:115%;font-family:"Book Antiqua","serif"">The Respondent Company who will be referred to in this ruling simply as "Ashanti", is a Ghanaian Company incorporated under the Laws of Ghana in 1974 and became a public company limited by shares in March 1994. The stated capital of Ashanti is 200,000,000 ordinary shares of no par value and one special rights redeemable preference share of no par value. As at 31st December 1999, 112,893,000 ordinary shares and the one special rights redeemable preference share had been issued. Ashanti carries on business as a gold exploration development and mining company. There is evidence before me that in addition to being listed on the Ghana stock exchange, Ashanti went international in 1994 and is currently listed on the London, New York, the Australian, the Zimbabwe and the Toronto stock exchanges.<o:p></o:p></span></p><p class="MsoNormal" style="text-align:justify;line-height:115%"><span style="font-size:12.0pt;line-height:115%;font-family:"Book Antiqua","serif"">The complaint of the Applicants is that when Ashanti went public internationally in May 1994, its shares were offered to the public at US$20.0 per ordinary share but at the close of trading on the New York exchange on 5th January 2000, the value of Ashanti's shares had fallen drastically and were quoted at US$3.125 per share. According to the Applicants, the reduction in the value of the shares was occasioned as a result of a press release by Ashanti on 5/10/99 when it admitted that it was encountering problems meeting its obligations to post collaterals on its hedge book commitments. Ashanti stated that if it were to exit or buy back its forward sales arrangements at US$325 an ounce, it would cost the company US$572 million. The day before the press release, that is to say on 4/10/99, it is alleged that Ashanti's shares stood at US$9.37 giving a market capitalization of approximately US$1.0 billion. The resultant fall in the shares, left Ashanti with a market capitalization of only US$374 million approximately. <o:p></o:p></span></p><p class="MsoNormal" style="text-align:justify;line-height:115%"><span style="font-size:12.0pt;line-height:115%;font-family:"Book Antiqua","serif"">It is noted by the Applicants that the problems of Ashanti on its hedge book, have now widened to encompass its overall financial stability and that at the end of September 1999, Ashanti's net debt was US$460.5 million. Ashanti, the Applicants maintain requires a current working capital of approximately US$250 million of which US$95.0 million relates to a revolving credit facility which fell due at the end of December 1999 and which needs to be renewed. In addition, the Company needs approximately US$110 million for development of the Geita Mines in Tanzania. Cash resources are also required to satisfy working capital requirements due to operational cash flow shortfalls and the failure to renew previous financial facilities. <o:p></o:p></span></p><p class="MsoNormal" style="text-align:justify;line-height:115%"><span style="font-size:12.0pt;line-height:115%;font-family:"Book Antiqua","serif"">Mr. Tony Lithur, leading Counsel for the Applicants painted a gloomy picture of a company under dire financial distress. He submitted that the Board of Directors have acted imprudently in handling the financial crises of Ashanti and that members of the board have shown their commitment to an agenda that will plunge Ashanti deeper into the ongoing crises and if steps are not taken quickly, the crises will lead the company into bankruptcy. Mr. Lithur submitted further that Ashanti intend to negotiate for a loan, and that in the view of the Government of Ghana and the Applicants, a further debt in the magnitude proposed will enlarge the debts of Ashanti already in distress and will further endanger the value of its shares. According to him, the Directors have not acted in the best interest of Ashanti, as 5 out of a membership of 13 owe allegiance to Lonmin PLC which has a shareholding of 32% in Ashanti. It is the view of Mr. Lithur that the current arrangement and composition of the Board tilts in favour of Lonmin PLC. He stated that the 5 Board members are paid employees of Lonmin PLC who as employees should be implementing policies and not laying down policies as they do now. To Counsel, the Board as presently constituted is not independent. Mr. Sam Jonah, the Chief Executive of Ashanti is an employee of Lonmin and the five other employees are answerable to Mr. Sam Jonah. He invited the Court to note that it is this very Board that is handling the present crises of Ashanti. To demonstrate the absence of independence on the part of the Board, Counsel referred to Exhibit JCG3, a resignation letter of the deponent to the application dated 4/10/99 in which letter Mr. Jean Claude Gandur stated that he had resigned as a Board member since his schedule did not allow him anymore to participate on the Board as a passive member, and that his presence on the Board as Director was just to acknowledge documents prepared by the executives. Counsel noted also that the same day that Ashanti announced its crises, Lonmin PLC made a bid for Ashanti but for the insistence of the Government of Ghana and some shareholders, the Board would have accepted the bid. In the view of Counsel, the rejection by the Board of an asset sale, particularly the sale of Geita Mines in Tanzania to Barrick Gold of Canada is evidence of Lonmin's influence, which has been geared t</main>
