BHP in counterclaim against VDM
BHP Billiton is pursuing a multimillion-dollar counterclaim against contractor VDM Group in a dispute over a Pilbara iron ore project.
The action yesterday forced VDM into a trading halt, hitting preparations for the dispatch of a prospectus today for an $18 million capital raising.
The resources giant in August removed VDM's crew before the completion of a $25 million construction contract at the Jimblebar project.
The contractor has since succeeded in winning $4 million in claims against BHP through a mediation process.
It has been seeking payment and damages of more than $10 million.
BHP is understood to be seeking more than $5 million from VDM for failing to complete work.
Lawyers for VDM are expected to argue that the work could not have been done because of the contractor's removal from the site.
The company last night was still planning to mail the revised prospectus to shareholders today for the one-for-one rights issue, including a clarification about the Jimblebar dispute.
The funding effort is part of a recapitalisation engineered by controlling shareholder and managing director Dongyi Hua.
Dr Hua's investment in VDM effectively became a rescue from insolvency after BHP took action in August. Under the recovery plan, $1.4 million in shares were issued to creditors associated with the Jimblebar contract.
The capital raising is priced at 1¢ a share. The stock last traded yesterday at 0.9¢.
Under Dr Hua's leadership, VDM has shed its east coast construction arm and design consultancies. He has outlined plans to transform the contractor into an international mining services provider.
