Whitehaven activist investor Bell Rock slapped by investment watchdog

afr.com:

British hedge fund Bell Rock Capital Management did not meet the disclosure standards required by Australian investment laws during its activist campaign against Whitehaven Coal, according to the Takeovers Panel.

The panel ordered Bell Rock to issue a “corrective notice” within five days outlining its full holding of Whitehaven shares and derivatives, after finding the hedge fund’s failure to properly disclose its investments had created a market for Whitehaven shares that was not efficient, competitive or informed.

Wednesday’s ruling by the Takeovers Panel is another blow to a struggling activist campaign that failed to achieve its primary goal: to deter Whitehaven from spending billions on new coal mines and instead return billions of dollars to shareholders.

Whitehaven defied Bell Rock’s pressure in October when it agreed to pay up to $6.4 billion to acquire BHP’s Daunia and Blackwater coking coal mines, under a transaction that has forced the suspension of Whitehaven’s share buyback program.

The acquisition is expected to be finalised in mid-2024.

Whitehaven complained on October 25 that Bell Rock had privately boasted of controlling a stake in Whitehaven that was almost double the size of its publicly declared stake.

Bell Rock subsequently confirmed on October 30 that it had been controlling close to 10 per cent of Whitehaven if its ordinary shares and derivative positions were combined.

The hedge fund reduced its stake to just over 5 per cent on that day, and then sold it down further to just under 5 per cent in mid-November.

The panel said on Wednesday that Bell Rock’s approach to disclosure of its Whitehaven investment over the past 17 months amounted to “unacceptable circumstances”.

The panel found that Bell