Nuplex reaches settlement with Securities Commission

Wednesday 23rd February 2011 2 Comments

Nuplex is to make around $3 million available as compensation for shareholders who bought and retained shares in the company for a period in late 2008 and early 2009, under a settlement reached with the Securities Commission.

Last April, the commission started civil proceedings against Nuplex Industries and six of its present or past directors - John Hirst, Robert Aitken, Barbara Gibson, David Jackson, Bryan Kensington and  Michael Wynter.

The commission alleged Nuplex should have announced to the market a forecast and (subsequent) confirmed breach by Nuplex of the senior debt cover ratio covenant in its banking facility agreement as at December 31, 2008.

The commission alleged that was material information and that the failure to announce it to the market was a breach of the continuous disclosure rules in NZSX listing rules and thereby a breach of section 19B of the Securities Markets Act 1988.

The commission also alleged that the defendant-directors were a party to that breach by Nuplex. A statement agreed by the commission and Nuplex, published today, said the parties had reached a full and final settlement of the matters raised in the commission's proceedings.

As part of that settlement, Nuplex would make available $3,054,980.57 as compensation for all shareholders who bought and retained its shares between December 22, 2008 and February 18, 2009. Nuplex would write to all shareholders who bought and retained shares in that period setting out the terms of the compensation offer.

Nuplex acknowledged that, once it was apparent to the company the covenant would be breached, that was material information which should have been disclosed to the market, the statement said. The company also acknowledged it was therefore in breach of the continuous disclosure rules, and in breach of the Securities Markets Act.

Nuplex had agreed to pay $148,127.53 as a contribution to the commission's investigation and court costs. The commission's court proceedings against Nuplex and the directors would be discontinued.

In its own release, Nuplex said it was pleased to have put the long-running dispute behind it.

Nuplex chairman Rob Aitken said a committee of directors not named in the proceedings had concluded it was in shareholders' best interests for the company to settle with the commission, and to do so along lines that benefited shareholders who may have been affected by the company's inadvertent breach of continuous disclosure rules.

Nuplex independent director Peter Springford, who chaired the committee, said the company had weighed up a number of factors including the potential costs of defending all matters raised in the commission's proceedings, and the ongoing distraction to the company and its board and management.

NZPA

Comments from our readers

On 23 February 2011 at 2:03 pm Dirk Hudig said:

Good on Nuplex for finally accepting the debt covenants breach should have been publicised/disclosed. As for the chairman stating the discosure failure was "inadvertent" - that is disingenuous. Chairman Rob Aitken (on behalf of the Board) until now has on numerous occasions contended the breach did not need to be advised to the Stock Exchange under continuous disclosure requirements.

On 9 March 2011 at 10:53 am Bernie Fuller said:

I am not sure why current shareholders have to pay for the mistake of the Board. I think the settlement gets the Board off any personal liability which should have been covered by Directors Liability insurance.