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The directors of the Wynyard Group were aware of the company's "extreme" cash situation shortly before its collapse, but only informed the market too late, the Financial Markets Authority said.
Wynyard has been the biggest technological disaster of recent years. It was liquidated in February 2017 and owed nearly $ 177 million to unsecured creditors, very little of which was recovered. He also raised $ 171 million from shareholders when he registered on the NZX.
The Autorité des marchés financiers (FMA) interviewed three directors and reviewed reports and the announcement of the Wynyard market, which, according to the FMA, underestimated the speed with which cash flowed to 39, announcement of the shock of the voluntary administration end of October 2016.
Wynyard's directors praised the FMA's "late" finding that no one had broken the law on the behavior of the financial markets, but they rejected "any suggestion that continuous disclosure obligations do not would not be respected. "
READ MORE:
* The first day, bad news for Wynyard staff
* Bitter lesson for investors as Wynyard calls directors
* A foreign investor said that Wynyard's failure was largely due to the "financial crisis" in New Zealand
Before collapsing on August 24, 2016, Wynyard directors said they expect their cash to be "positive" by the end of the year. A loan of $ 10 million was available for use – but nothing happened and the situation deteriorated.
IAIN MCGREGOR / STUFF
Craig Richardson, one of the six directors of Wynyard. he was also director general
"There seems to have been a limited understanding of the severity of the company's problems or the considerable deterioration of the situation.The Wynyard stock price, which has remained relatively stable after the August 24 announcement , valued the company at $ 38.5 million previously at the commercial stop.
"After the August strategic update, Wynyard had to either obtain a major contract with the government, or generate capital from an asset sale in order to significantly extend its payment trail. . "
Instead, the crisis worsened and the directors appointed volunteer directors on October 25th.
The FMA said the September board reports said the "extreme" cash position should have been announced.
"The board informed the FMA that she had seriously discussed and examined, in the presence of her advisors, whether she was in possession of any important information that was to be disclosed.
"In our opinion … he should have acknowledged that the deterioration of Wynyard's forecast cash position and its indirect effects was material information.
"While institutional shareholders were approaching, the market interest was insufficient to allow for an emergency capital increase.
"Other options, such as the sale of assets, were stalled or were still nascent and it would take months to progress.It's this information that would have pushed the board of directors to choose to entrust Wynyard to a voluntary administration on October 25, "the report says.
The FMA noted that the board's decisions had been made against a change of director, a reduction of staff and a new chief financial officer.
But the company was no longer active and the FMA said it was unlikely that directors would be sued for failing to announce the deal.
At the same time, the directors of Wyndayrd stated in a statement that they also supported the conclusion that the FMA would not be able to establish the slightest violation of the fair dealing provisions. .
"It is, however, disappointing that it took more than two years for this process and the following report to be published.In spite of this prolonged period and the behavior of the board of directors as a key priority, only two of the five independent directors and none of the external professional advisors of the board, were interviewed by the FMA.
"With respect to the conclusions presented, the directors and their advisors reject any suggestion that the continuous disclosure obligations would not be respected.
"More specifically, the FMA has identified in its report a matter of continuous disclosure, a reference to a deterioration of cash flow during this period that would have, on its own, impacted the available cash flow of a little more than a week.
"The directors do not accept this conclusion of the FMA when they examine this issue in isolation, or in the context of potential sales of assets, of progress towards closing the target contract (s). , the Skipton Facility (Loan Facility) and any capital increase that would have been realized at stake at the time.
"The directors' opinion was supported by external advisors at the time, who recently provided the same conclusion to the FMA in writing.
"Changes were made to the board of directors in June 2016 to restructure a troubled company that had already raised $ 176 million from shareholders.
"Between June and October 2016, the Board of Directors, external advisors, executives and Wynyard's wider team explored all possible ways to improve performance in order to secure a future for long term.
"Despite these efforts, this did not happen, which was not a result that anyone wanted or worked intentionally," the directors said.
The statement was prepared by a law firm on behalf of the then directors – Craig Richardson, Guy Haddleton, Louis Grever, Martin Riegel, Richard Dellabarca and Fiona Oliver.
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