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Pemba contests Coverforce stakes held by Resilium owners

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Private equity investor Pemba Capital Partners is seeking court orders to have Coverforce shareholding documents corrected in a dispute centring around equity issued to the owners of the Resilium broking business.

Documents filed in the NSW Supreme Court in Sydney, and seen by, contest which of two shareholder agreements is in force and whether Pemba has the right to push through a sale of the entire company to AUB Group.

AUB was scheduled to complete due diligence on the $150-200 million deal by September 30, but the dispute is not expected to return to the court until the second half of October.

South African-owned Pemba acquired a stake in Coverforce in 2012 and says a shareholders’ agreement later entered into remains in force. Pemba believes it properly triggered exit clauses after receiving a sale proposal from AUB in May.

But Coverforce founder Jim Angelis says a revised agreement that led to new shareholdings was decided in October, and even if previous arrangements still apply, Pemba has not met sale notice requirements.

Under the revised agreement, equity was issued on June 1 to Adrian Kitchin, Drue Castanelli and Ben Hastie, who completed the buyout of authorised representative company Resilium from Suncorp this year. Mr Kitchin is the Resilium MD, Mr Castanelli is Director Operations and Compliance, and Mr Hastie is National Manager of Sales and Distribution.

Pemba says the new agreement involved Coverforce entering into a binding term sheet with Mr Kitchin relating to the Resilium buyout. The term sheet mentions a loan to Mr Kitchin, which would have triggered rules that say certain financial actions above $50,000 require special majority approval.

The investment company says there was no special majority board decision, and “it is aggrieved by the incorrect inclusion” of Mr Kitchin, Mr Hastie and Mr Castanelli in the share register and in ASIC records.

ASIC documents show Mr Kitchin holds 10% of Coverforce and is a director. Mr Angelis controls 42% and two Pemba entities have around 43%.

But Pemba says Mr Kitchin “is not and has never been a director of Coverforce”.

The Australian Financial Review says Coverforce raised the capital to fund the Resilium management buyout and held options to acquire the company.

A Resilium spokeswoman told the firm will not comment on the matter while proceedings are before the court.