Cons Beacon ordered to pay debenture holders $554,000
2008-11-20 12:10 ET - Street Wire
by Mike Caswell
Consolidated Beacon Resources Ltd. must pay $554,000 to three debenture holders, the Supreme Court of British Columbia has ordered. The debenture holders, Christopher Vorberg, Ramona Vorberg and Nazinin Jamshidi, claimed that the company failed to pay their debentures, despite demands.
They filed a motion on Nov. 13, 2008, asking for an order that the company pay the debentures without a full hearing. A judge agreed, and granted their request on Nov. 17.
Vorberg's statement of claim
Mr. Vorberg and the other plaintiffs sued the company on July 30, 2008. They claimed that they purchased convertible debentures on March 6, 2006.
The debentures bore interest at 8 per cent per year, and were convertible at 40 cents, at the option of the holder, according to the suit. They matured on Sept. 6, 2006.
The company was unable to repay those debentures on time, so it issued amended debentures to the plaintiffs on Jan. 22, 2007, the suit states. The amended debentures reduced the conversion price from 40 cents to 10 cents, and had a maturity date of Feb. 23, 2008.
(The stock was at 51 cents when the original debentures were issued, eight cents when they were amended and is now at three cents.)
When the new maturity date came up, the company was still unable to pay, the suit alleged. On May 16, 2008, the plaintiffs demanded repayment of the $500,000 in principal plus $37,890 in interest.
"Since February 23, 2008, the Defendant has failed, refused or neglected to pay the sum due on the three amended convertible debentures," the suit stated.
The suit sought $500,000 in principal plus $46,000 in unpaid interest. The suit was filed on behalf of the plaintiffs by Rod Anderson of Harper Grey LLP.
Consolidated Beacon's statement of defence
The company filed a two-page statement of defence on Aug. 29, 2008, that contained few details. Consolidated Beacon "denied that it entered agreements to sell the alleged debentures or any debentures ... at all."
The company said that even if it did enter agreements to sell the debentures, it did not owe the plaintiffs any money.
The statement of defence also said that there was "no consideration to support the alleged contract" and if there was "the alleged consideration is a past consideration and is not sufficient in law to support the alleged contract."
The company asked that the claim be dismissed with costs. It was represented by Paul Miller of Boughton Law Corp.
Change of management
Consolidated Beacon is under different management than it was when it issued the debentures. On July 31, 2007, it appointed Richard Hawes as its president and chief executive officer. He replaced Nathan Hansen. The company also appointed Norman Johnson as its chief financial officer.
In its June 30, 2008, second quarter financials the company acknowledged that it owed $575,000 to debenture holders. It said it was negotiating to settle the debt, but should the negotiations fail it "would have a serious impact on the Company's ability to continue operations."
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