Eastern Platinum Ltd - Legal Action by 2538520 Ontario Limited

TORONTO, March 02, 2020 (GLOBE NEWSWIRE) -- The following summarizes the developments with respect to legal actions currently being pursued by 2538520 Ontario Limited (the “Concerned Shareholder”) in respect of transactions between Eastern Platinum Ltd (“Eastplats”) (TSX: ELR) and Union Goal Offshore Solution Limited (the “Union Goal Transaction”).

The action by 2538520 Ontario Limited

In November 2018, the Concerned Shareholder initiated a petition to seek leave from the Supreme Court of British Columbia to commence a derivative action in the name and on behalf of Eastplats against certain former and current directors of Eastplats. The Concerned Shareholder’s proceeding involved the following allegations:

• It appears that Eastplats will suffer a loss of $50 million as a result of entering into the Union Goal Transaction;
• Union Goal Transaction may have been designed to drive Eastplats into insolvency and could result in a takeover of Eastplats by Union Goal;
• Eastplats disclosed on March 5, 2018 that the estimated capital requirement in connection with the Union Goal Transaction was US$14 million, but failed to disclose the cost of the equipment purchased from Union Goal was US$41.4 million,
• The Union Goal transaction involve parties that are related to Eastplasts or certain directors or members of management of Eastplats.

Those allegations were denied by Eastplats and have not been proven in Court.

The Ruling

On August 28, 2019 Justice Smith of the Supreme Court of British Columbia found that the proposed derivative action appears to be in the best interests of Eastplats, but leave should be denied because the Concerned Shareholder had failed to satisfy its onus of establishing that it was acting in good faith.

The Concerned Shareholder is appealing the ruling, especially given the Court’s vital finding that the proposed action was deemed to be in the best interest of Eastplats.

Concerned about Governance - Resignation of directors of Eastplats

One reason for concern surrounding the Union Goal Transaction, which was announced on March 5, 2018, is the concern regarding independent governance at Eastplats. Surprisingly close to the announced transaction date, Mr. Douglas Perkin and Mr. Sheng (Sam) Wang resigned from the board of directors of Eastplats on February 9, 2018 and March 29, 2018 respectively.  Interestingly, 2 days before Mr. Wang’s departure a new director (Mr. Nigel Dentoom) was added to the Eastplast board. Despite not being an active Eastplats director prior to the transaction announcement, Mr. Dentoom stated on January 10, 2019 that “the Board of Directors acted appropriately” in the Union Goal Transaction. Nevertheless only 9 months later Mr. Nigel Dentoom himself resigned from the board of Eastplats on October 1, 2019.

Message to other shareholders

The Concerned Shareholder has spent considerable time and resources seeking leave to bring a derivative action for the benefit of all shareholders of Eastplats. Leave was denied because the Court was not satisfied that the Concerned Shareholder was acting in good faith. If you are also a shareholder of Eastplats and the disclosed news raises concerns about your investment in Eastplats, then this Concerned Shareholder urges you to contact our counsel to assist pursuing leave to commence a similar derivative action on behalf of Eastplats. Please contact either Mr. Simon Bieber (SBieber@agbllp.com) or Mr. Nathaniel Read-Ellis (NReadEllis@agbllp.com) from the offices of Adair Goldblatt Bieber LLP at 416-499-9940.

2538520 Ontario Limited contact information:
Unit 103, 54 West Beaver Creek Road
Richmond Hill, ON, Canada L4B 1G5
Attention: Dr. R.K. Hong
Tel: +1 647 886 8026
Fax: +1-888-684-8868
RK.Hong@Microgreen.ca