United Petroleum spat fuels fees battle

CHRISTINE LACY & BEN BUTLER
August 31, 2017
The Australian

A failed bid to float fuel empire United Petroleum for as much as $500 million has this week landed a clutch of leading lawyers in court chasing unpaid fees and defending counter-claims from servo millionaires Avi Silver and Eddie Hirsch.

In Victorian Supreme Court proceedings that kicked off on Tuesday, top-drawer law firm Herbert Smith Freehills, whose capital markets partner Michael Ziegelaar worked on the deal late last year, claims UP failed to pay it $1.2m in fees while UP claims Freehills owes it $12m for bad advice.

The case has also drawn in the heavy-hitting board assembled for the float, including former UBS exec Tim Antonie, who’s now a director at Solomon Lew’s Premier Investments, Harvey Norman chief operating officer John Slack-Smith, veteran director Lyndsey Cattermole and former UP chairman Martin Hudson, a former director of Cleanaway and AMP Super.

Also sucked into the messy saga are the float’s would-be joint lead managers, Credit Suisse, led by Adam Lennen, and Morgan Stanley, led by Mark Burmeister, as well as the offer’s financial adviser KPMG, where the work was led by partner ­George Svinos (who has since moved to UP itself, where he is CFO).

It was UP’s fourth attempt at listing, but the court has heard that as deadlines approached in late October the non-executive directors started to get cold feet about the financial numbers in the draft prospectus, which have been described in court as “rubbery”. 

Silver responded by sacking the directors and Freehills, counsel for the law firm Phil Crutchfield, QC, told the court on Monday.

The court heard Antonie, who was well aware of his legal responsibility for the prospectus, raised his concerns at a meeting on October 17 with Ziegelaar and UBS managing director Stephanie Charles (who’s since joined Ben Gray at his post-TPG shop).

Ziegelaar’s notes record Antonie fretting: “Banked all good bits and assumed all negatives will get better. QC could rip us apart.”

Crutchfield said Silver delegated responsibility for the IPO to others and was now complaining of being kept in the dark.

“By the way, if Mr Silver is now complaining because he was treated like a mushroom, why didn’t someone at United say to an external person, look, Avi wants to be involved?” 

Counsel for UP, Michael Wyles, QC, said Ziegelaar billed for 225 hours of work “but he apparently didn’t have to do anything … but chair the due diligence committee”.

He accused the Freehills partner of sneaking “around behind the back of the founders with some directors, clearly in breach of their duty of fidelity to the company”.

The parties were last seen yesterday in mediation before Associate Justice John Efthim on the orders of trial judge Justice James Judd