- Shares in Buddy Technologies (BUD) slumped on their return to official quotation after the company revealed it was in a dispute with a former prospective funder
- Back in early May, Buddy entered a share purchase agreement (SPA) with CST Investments
- But that deal was cancelled in early September because Buddy received support from its top 20 shareholders through a late-May share placement
- This morning, however, Buddy announced CST had taken the company to court over the matter
- However, because of Buddy’s COVID-19 protocol, it claims it wasn’t aware the writ had been sent via post to its registered office
- As a result, the tech stock couldn’t defend itself in court, and a default judgement was awarded to CST, meaning Buddy has been ordered to pay unspecified damages
- Moving ahead, Buddy has applied to have the judgement set aside while it puts together a defence to oppose the claim
- Buddy’s share price fell 7.63 per cent to 5.5 cents per share
Shares in Buddy Technologies (BUD) slumped on their return to official quotation after the company revealed it was in a dispute with a former prospective funder.
Back in early May, Buddy entered a share purchase agreement (SPA) with CST Investments. Under the deal, the investor pledged to provide Buddy with $12.5 million in working capital over two years. In exchange, the tech stock would provide 357 million shares to CST.
But just a few months later, on September 7, Buddy confirmed it had cut ties and ended the financing agreement. It told shareholders the facility — set up to help the company navigate COVID-19’s economic effects — was closed before it was drawn upon. That’s because of support Buddy received from its top 20 investors during a late-May placement.
This morning, however, Buddy announced CST had taken the company to court over the matter. Worse still, it wasn’t even aware of the legal proceedings.
The claim
In August, WA’s District Court issued a writ of summons, alleging the SPA was breached and that CST was seeking unspecified damages.
But because of Buddy’s COVID-19 protocol, it claims it wasn’t aware the writ had been sent via post to its registered office. In fact, it only found out there was a summons to begin with when it received the District Court documentation.
As a result, Buddy was counted as a no-show at the court hearing, and CST was awarded the default judgement. That means it’s been ordered to pay out those unspecified damages.
But it doesn’t mean Buddy isn’t fighting back.
“The company considers the claim to be fundamentally misconceived and denies that CST is entitled to recover any material damages whatsoever from Buddy,” the tech stock stated today.
“The company has expressed its disappointment to CST that neither the company nor its legal counsel (well known to CST and their legal counsel from negotiating the original agreement), was afforded the professional courtesy of an email making it aware of the writ prior to CST applying for and default judgment being
granted,” it told the market.
Where to now?
Moving forward, the lighting tech specialist wants to fight the claim in the District Court.
“The company has instructed its legal counsel to promptly apply to set aside the default judgment and defend the legal proceedings,” Buddy confirmed today.
Looking ahead, the tech lister also claims it’s “business as usual” — its finance facilities remain unaffected, and team members across the globe will continue operations. But even though the company will oppose the ruling, investors were spooked by today’s news.
Buddy’s share price fell 7.63 per cent to 5.5 cents per share at 2:29 pm AEDT.