Shemesian fails in bid for Aztec gold
While mystery man Mick spends his time between Dubai and Europe doing deals involving the likes of day trader Leo "The Gun" Khouri, his brother Richard Shemesian is a Sydney-based corporate adviser.
Richard's company, Carlow Castle, trades as Greenhill Capital Partners, but seems unrelated to the Greenhill & Co business run by Simon Mordant, Graeme Samuel and friends.
In the early 2000s, Shemesian was advising Perth mining company Aztec Resources, for which he received a modest $10,000 a month. But in 2005, the company brought in the big boys at Macquarie, and by February 2006 the relationship with Shemesian was over.
The deed laying out the divorce settlement included a provision that Shemesian would get a success fee of 2 per cent of the value of any takeover bid that was approved by the Aztec board before mid-2007.
In July 2006, Mount Gibson Iron launched an all-scrip offer for Aztec, which Aztec slammed as "opportunistic", "inadequate" and "not fair". Given the hostility, Shemesian and Macquarie both became concerned they wouldn't get paid if a takeover went ahead.
Shemesian flew to Perth in October 2006 to meet Aztec director Ian Burston and MD Peter Bilbe, who, he told the court, assured him that both sets of advisers would be paid.
Despite Aztec's continued angry protestations, by November 22 Mount Gibson had received acceptances for more than 50 per cent of shares.
Six days later the Aztec board folded, recommending shareholders accept the offer. Shemesian sent Aztec his invoice the same day, and Macquarie asked for its $4.3 million fee the day after.
Aztec never paid Shemesian. Six years later, he sued. And lost.
Handing down his judgment last week, NSW Supreme Court judge Justice David Hammerschlag said the Aztec board "capitulated but only after the battle had been lost".
"At that point the board may well have considered it in the interests of shareholders to sell into the takeover. But a commercially sensible approach would equate this more with failure than with the type of success the deed had in mind."
He dismissed the case and awarded costs against Shemesian.
As for Macquarie, the millionaire's factory did what it does best: like Eric B. & Rakim, it was paid in full.
Hardly Dickens
The Australian Competition and Consumer Commission's court case against erectile dysfunction medicine merchants Advanced Medical Institute started in the Federal Court on Monday, with QC Julian Burnside going in hard on behalf of the regulator.
AMI, led by Jack Vaisman and famous for its garish "Want longer lasting sex?" billboards, is alleged to have engaged in misleading and deceptive conduct.
As the day unfolded, it emerged that AMI ran an internal newsletter to keep staff up to speed with goings on within the company.
Its title? Hard Times, of course.
Spam slam
Domino's Pizza boss Don Meij isn't the only corporate type feeling the heat from social media's army of underemployed smarty-pants.
Gail Kelly's Westpac was also feeling the heat on Monday after an ill-advised tweet.
Burbled the official Westpac Twitter account: "What's one way we could help you pay off your home loan sooner?" Which earned an electron-quick response from Rob Nadebaum: "Try passing on a rate cut in full for a change?"
At least Kelly and company were spared the porn spam that marred Meij's efforts to explain his overhyped pizza revolution on Facebook last week.
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Frequently Asked Questions about this Article…
Richard Shemesian is a Sydney-based corporate adviser whose firm Carlow Castle traded as Greenhill Capital Partners. He advised Perth miner Aztec Resources in the early 2000s (receiving about $10,000 a month) and relied on a deed that promised him a 2% success fee on any takeover approved by the Aztec board before mid‑2007. After Mount Gibson Iron’s takeover bid went ahead and the Aztec board recommended acceptance, Shemesian invoiced Aztec for what he said was a roughly $5.8 million fee. Aztec never paid, he sued six years later, and the court dismissed his claim.
Shemesian’s deed with Aztec provided for a success fee equal to 2% of the value of any takeover bid approved by the Aztec board before mid‑2007. He sought about $5.8 million under that clause after the Mount Gibson Iron offer succeeded, while Macquarie later sought a $4.3 million fee for its role.
In July 2006 Mount Gibson Iron launched an all‑scrip offer for Aztec Resources that Aztec called “opportunistic” and “inadequate.” By 22 November Mount Gibson had acceptances for more than 50% of Aztec shares, and six days later the Aztec board recommended shareholders accept the offer, effectively ending the takeover battle.
Justice David Hammerschlag said the Aztec board “capitulated but only after the battle had been lost,” and that the board’s decision to sell at that point was more like a commercial failure than the kind of success the deed contemplated. The judge dismissed Shemesian’s case and ordered costs against him.
Yes. The article reports that Macquarie was paid its fee in full, while Shemesian’s claim was not paid and later rejected by the court.
An all‑scrip offer is a takeover offer composed entirely of shares rather than cash. In the Aztec case, both Shemesian and Macquarie were concerned an all‑scrip, hostile or contested offer might leave advisers uncertain about being paid if the target resisted the bid.
The case highlights that success fees depend on the precise wording and intended meaning in adviser deeds. A board’s late recommendation after a takeover battle is not automatically treated as the kind of ‘success’ that triggers a fee, so clarity in contracts and understanding how courts may interpret outcomes matters for advisers and investors alike.
The Aztec judgment shows a board may recommend acceptance once a takeover battle is effectively lost, potentially because it’s in shareholders’ interests to sell. For investors, a board recommendation does not necessarily mean advisers’ success conditions are met — courts may view such a capitulation as a commercial failure rather than the ‘success’ set out in adviser agreements.
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