Commencement of legal proceedings against Brit Energy Holdings LLP, Pierpoalo Rocco and BritNRG Limited
MetalNRG plc (“MNRG” or the “Company”) announces that it has filed and served civil legal proceedings in the English High Court against BritENERGY Holdings LLP (the “LLP”), Pierpoalo Rocco (“Mr Rocco”) and BritNRG Limited (the “Joint Venture Company”) (together the “Defendants”) for, inter alia, a declaration and the recovery from the Defendants of monies paid to the LLP in 2021.
Following Mr Rocco’s resignation as a director of the Company, announced by the Company on 25 October 2021, the Company has also terminated Mr Rocco’s service agreement, as an employee, for cause, following an open and robust disciplinary process which, despite making written representations, Mr Rocco declined to attend. Mr Rocco has subsequently appealed the decision.
Both MNRG and its shareholders have been impacted by information circulated by Mr Rocco, the Joint Venture Company and the LLP on social media, which is considered by the Company to be misleading and factually incorrect. In particular, it has now been acknowledged by the Joint Venture Company that the Company is one of its shareholders despite recent social media claims to contrary.
As the Company has now formally served proceedings on the Defendants it is appropriate to provide a summary of the issues in dispute.
As previously announced and disclosed in 2021 the Company entered into an agreement to pay the LLP the sum of £475,000 to acquire 190 ordinary shares in the capital of the Joint Venture Company (the “SPA”) and the LLP agreed to procure the transfer of an additional 116 shares held by Mr Rocco to the Company upon the Company’s payment to the LLP of £475,000; the Company also entered into an option agreement pursuant to which the LLP paid the sum of £1 to the Company for an option to acquire up to 300 shares in the capital of the Joint Venture Company at the price of £4,000 per share (the “LLP Option”; a further option agreement was executed pursuant to which the Company paid the sum of £545,000 to the LLP for an option to acquire 150 shares in the Joint Venture Company at a price of £0.001 per share (the “Company Option”); a share charge which purported to grant a security interest in all convertible loan notes held by Company (which convert into shares in the Joint Venture Company and encompasses such acquired shares) in favour of the LLP to support the payment obligations of the Company under the Company Option; and a variation agreement between the Company, the LLP and the Joint Venture Company purporting to vary the terms of the existing shareholders agreement in respect of the Joint Venture Company (together, the “April Transaction Documents”).
The arrangements set out in the April Transaction Documents were (and were understood and agreed by the parties at the time of the entry into the same) to be an interconnected series of arrangements, with the entry into each such document being dependent upon the entry into the others. None of the arrangements set out in the April Transaction Documents were intended to be of legal effect in the event that all of the arrangements set out in the April Transaction Documents were not entered into and such arrangements were not legally effective.
The benefits to be acquired by the Company under the arrangements set out in the April Transaction Documents (in particular, under the SPA and the Company Option) was an “arrangement” involving the acquisition of “non cash assets” (within the meaning of section 190 of the Companies Act 2006) which were, at the time of the entry into the arrangements set out in the April Transaction Documents, “substantial” (within the meaning of section 191 of the Companies Act 2006, in that they (in particular the SPA and/or the Company Option) were said to be in respect of arrangements worth in excess of £100,000).
In pursuance of the arrangements set out in the April Transaction Documents, in a series of payments between 19 and 24 May 2021, the Company paid the sum of £1,019,999 to the LLP (being the sums due under SPA and the Company Option less the £1 due under the LLP Option) (the “Company Payment”).
It subsequently came to light that, following the Company having not received share certificates for the shares in the Joint Venture Company, at the time the parties entered into the April Transaction Documents a private company limited by shares (incorporated on 23 September 2015 and with its registered office address at 18 Anderson Drive, Aberdeen, Scotland, AB15 4TY)known as Old Compton Associates Limited (“OCAL”) had an interest in the capital of the LLP and by virtue of OCAL being owned by Mr Rocco’s wife, Mr Rocco and OCAL were connected persons for the purposes of sections 252 to 254 of the Companies Act 2006. In addition, it came to light that Mr Rocco had an additional, potentially substantial, direct interest in the LLP.
By reason of Mr Rocco’s then status as a director of the Company, the arrangements set out in the April Transaction Documents, being a “substantial property transaction”, required, in accordance with section 190 of the Companies Act 2006, the approval by a resolution of the members of the Company or to be conditional upon such approval first having been obtained. The Directors have at all times made it clear that they would have not entered into the April Transaction Documents on behalf of the Company had they been aware of the material interests of Mr Rocco in the LLP.
Accordingly, notwithstanding the requirements of section 190 of the Companies Act 2006, the arrangements set out in the April Transaction Documents were not approved by a resolution of the members of the Company in a general meeting and were not conditional upon such approval having been obtained, the Directors, other than Mr Rocco, being unaware of the material nature of Mr Rocco interests in the LLP.
As a result, the arrangements set out in the April Transaction Documents and the Company Payment were each voidable at the instance of the Company and by letter dated 22 September 2021, the Company gave notice that the arrangements set out in the April Transaction Documents were avoided and demanded repayment to the Company of the principal amount of the Company Payment. The LLP and Mr Rocco (by their joint solicitors) have sought to dispute the validity of this notice and have, in any event, refused and/or failed to pay to the Company the amount of the Company Payment.
The refusal by the LLP and Mr Rocco to accept that the arrangements set out in the April Transaction Documents have been avoided and/or to ensure the Company is repaid the principal amount of the Company Payment is without credible foundation; the Company has accordingly sought declaratory relief that it has avoided the arrangements set out in the April Transaction Documents and the Company Payment and an order for the immediate repayment of the principal amount of the Company Payment. The Defendants have not yet filed any defence.
In a separate action Mr Rocco has sought to recover his legal and other costs relating to the Company’s action described above and in relation to his summary dismissal by the Company under the terms of his service agreement in a case brought in the Courts of Scotland. The Company disputes that the ability to recover legal expenses under the contract was ever intended nor can be construed to extend to actions by the Company itself against Mr Rocco for breach of duty and/or misconduct against it, but is limited to the reasonable costs of advice in relation to any personal claims by third parties whilst discharging his duties to the Company. The Company is accordingly vigorously defending these claims.
The Company will provide further updates on these issues and the legal proceedings as appropriate.
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