BullsEye Insights

BullsEye: Daily London AIM RNS Round-Up

Monday 01 June 2020


Here is our summary of the day's hottest RNS alerts from across London's Alternative Investments Market (AIM).


Strategic Minerals (SML.LSE)

$21.9m Arbitration Decision Granted

Strategic Minerals plc, a producing mineral company actively developing projects prospective for battery materials , announced that, further to its announcement of 2 March 2020, the appointed arbitrator has awarded its wholly owned subsidiary, Southern Minerals Group (" SMG"), US$21,929,259 in damages and costs, exclusive of additional interest to be calculated as latterly described.


Highlights

  • Comprehensive decision addressing both procedural and factual issues of the arbitration and finding in SMG's favour

  • Total Arbitration award of US$21,929,259 plus additional interest (comprising liquidated damages of US$4,215,000, loss of profits of US$14,090,599, punitive damages of US$3,600,000 and arbitration costs of US$23,660)

  • Interest at 15%pa awarded on liquidated damages (both pre and post judgement) and on loss of profits (post judgement only)

  • SMG proceeding to confirm decision in the United States District Court in the client's local jurisdiction (where the arbitration technically took place)

  • Client's assets seized as part of a US Securities and Exchange Commission's investigation with the Court likely to appoint a receiver to manage the assets of the client mid-June 2020

  • Successful arbitration outcome puts SMG in the best possible case to seek recovery of this award, however visibility of the extent of this, if any, remains unclear pending further developments and the Company remains cautious on the ultimate outcome

The arbitrator, a retired judge, has provided a reasoned decision which is comprehensive, and evidences careful consideration of the specifics of this case, the risks that SMG took in committing its resources to the client and the callous disregard that the client showed in respect of the purchase and sale agreement and SMG.  The thoroughness of the decision also aids SMG as it moves forward.  Typically, arbitration awards are confirmed by courts as a pro-forma matter, but in the event the losing party challenges the award or the confirmation, the more well-reasoned the decision is, the easier it is for the prevailing party to have the decision confirmed and judgment entered. 

The arbitrator's decision considers the procedural elements of the case - namely the client's lack of participation in the arbitration proceedings with SMG, the factual findings, consideration of liquidated damages and lost profits, the applicability of punitive damages, pre and post-judgment interest, arbitration costs and attorney's fees.

1.  Procedural elements. 

The decision addresses the implications of the client's lack of participation in this proceeding.  Essentially, the arbitrator determined that the client had a reasonable opportunity to participate fully in the proceeding, and it did not.  He concludes that "all required due process was afforded to both sides through the impartial application of the Arbitration Rules agreed to by the parties in their agreement."  The arbitrator's decision effectively forecloses any arguments that the client might raise with respect to due process.

2.  Factual findings. 

The arbitrator decision's recounts, in detail, the uncontested facts that SMG alleged in its complaint and its affirmative case.  The arbitrator also cites specific requests for admissions that the client never contested, which confirmed the lack of payments from the client, the breach of the Agreement, and the liquidated damages through March 1, 2020.  In addition, the arbitrator adopted SMG's facts with respect to the terms of the sale and purchase agreement, the amendment thereto, and the client's pattern of non-payment and false promises.

3.  Damages. 

The arbitrator gave careful consideration to SMG's damages analysis - specifically noting the three scenarios SMG posited.  He concluded that SMG was conservative in its estimates and, most importantly, awarded $4,215,000 in liquidated damages and $14,090,599 in lost profits.  Ultimately, he concludes that SMG's analysis is "reasonable, conservative, and accurate."

4.  Punitive Damages/Bad Faith. 

Again, the arbitrator adopted SMG's extensive recitation of the client's acts of bad faith.  He examined the client's behavior and strongly concludes that "there can be no question that the continual bogus reassurances and purportedly detailed explanations of the imminent receipt of funds to pay the debt owed, were both malicious and 'committed recklessly with a wanton disregard for the plaintiff's rights.'"  He then awarded $3,600,000 in punitive damages. 

5.  Interest

The arbitrator awarded pre and post-judgment interest on the $4,215,000 in liquidated damages.  Likewise, the arbitrator awarded post-judgment interest on the $14,090,599 in lost profit damages.  However, as requested the Company, the arbitrator set the applicable interest at 15% as permitted under New Mexico law if the losing side acted in bad faith.  The usual interest rate would have been 8.75%. 

6.  Arbitration Costs

The arbitrator also awarded SMG all arbitration costs, which total $23,660.

From here, SMG will need to move to confirm this decision in the United States District Court in the client's local jurisdiction and where the arbitration technically took place.  The confirmation process is generally pro forma and only requires a short filing.

The Company has been advised by its lawyers to continue to withhold the name of the client until such time as it has filed in US federal court to confirm the arbitration. However, the Company has become aware that the client's assets have been seized as part of a US Securities and Exchange Commission's investigation, along with the assets of a number of related party entities, and that the court is likely to appoint a receiver to manage the assets of the client while the matter remains pending.  A decision from the judge is scheduled for mid-June on this point.  The memorandum in support of the motion to appoint the receiver suggests that the client may still have some real assets that warrant the appointment of a receiver to protect the status quo. SMG will advise the court and receiver in the SEC matter of the amounts owed once judgment is entered by the court.


For the full RNS, see: https://www.investegate.co.uk/strategic-minerals--sml-/rns/-21-9m-arbitration-decision-granted/202006010700074505O/

Feedback Plc (FDBK.LSE)

Bleepa® achieves CE Mark

Feedback plc, the specialist medical imaging technology company, announced that, in compliance with the Medical Device Directive ("MD Directive") and having met the stringent criteria associated with the manufacture of a medical device, it has affixed a CE Mark to Bleepa. Bleepa is Feedback's flagship imaging-based communication platform for clinicians to access medical grade images through smartphones, tablets and desktops.

All clinical communication platforms that display digital images of patients for the purpose of diagnosis are classed as medical devices under the MD Directive guidelines and require a CE mark.  The Directors of Feedback believe that Bleepa is the only communication platform to address the UK market that has met MD Directive certification requirements. 

The Directors also believe that having a CE mark is a major step forward for the Bleepa product since the use of a non-CE marked product inappropriately may put individual clinicians and Trusts at risk of civil claims for damages arising from misuse of that product. For this reason the Medicines & Healthcare products Regulatory Agency ("MHRA") advise that all providers only use appropriately CE marked devices.


For full RNS details, see: https://www.investegate.co.uk/feedback-plc--fdbk-/rns/bleepa--achieves-ce-mark/202006010700074523O/

Tissue Regenix Group (TRX.LSE)

CE Mark awarded for OrthoPure XT

Tissue Regenix Group, the regenerative medical devices company, today announced that OrthoPure XT has been awarded a CE Mark.


The CE mark has been awarded for revision of the anterior cruciate ligament (ACL) following re-rupture and additionally, permits use for the reconstruction of other knee ligaments, including multi-ligament procedures following trauma.


OrthoPure XT is a decellularised xenograft ligament that enables tissue regeneration, utilising the Group's patented dCELL® technology which originated from the University of Leeds. The CE mark was obtained following a single arm, non-comparative, prospective study undertaken by the Group over three years. The main outcome was confirmation of safety at two years, with maintenance of knee function.


For full RNS details, see: https://www.investegate.co.uk/tissue-regenix-group--trx-/rns/ce-mark-awarded-for-orthopure-xt/202006010700084554O/

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