Wilson Neill directors face court charges

Friday 2nd March 2001

By Nicholas Bryant

Court authorities revealed yesterday that 59 charges had been laid against a group of Wilson Neill Corporation directors - a disclosure that comes just days before shareholders will be asked to approve the acquisition of publishing house IT Media.

The court action could not have come at a worse time for Wilson Neill:

On Tuesday a special shareholders meeting will be held to decide whether to acquire IT Media by issuing 250 million 6c Wilson Neill shares.
IT Media today launched the first issue of the New Zealand Business Times, a weekly publication intended to be the flagship of the new Wilson Neill media company.
The charges are understood to be for 59 separate alleged breaches of s47 of the Companies Act, for which the directors could be fined a total of $590,000.
The intended IT Media purchase, like so many of Wilson Neill's deals, will be made through the issue of shares - the same practice at the centre of the court action.

It is likely this story will be the first the defendants - Wilson Neill director Diane Giles; its chairman, Trevor Mason; and former directors Malcolm Johnson and Paul Hyslop - will have heard of the charges they face.

The Dunedin District Court told The National Business Review yesterday it had received the paperwork from the Companies Office but had not yet sent the four defendants a summons.

Wilson Neill is the majority owner of wireless internet company Radionet, Cobb & Co budget restaurants and the trendy Iguacu eatery in Auckland's Parnell.

For a 30% stake in Wilson Neill, IT Media's owners, Tim Connell and Eric Watson, are due to receive 250 million 6c Wilson Neill shares.

That is almost as many shares as the Companies Office believes were issued in breach of the Companies Act.

Between November 1999 and June 2000 at least 201 million Wilson Neill shares were issued but allegedly not properly processed by the board.

The 12 separate issues took the number of Wilson Neill shares on the market from about 277 million to about 578 million, resulting in a massive dilution of share value for investors. It is believed that dilution, at a time of patchy growth, was responsible for Wilson Neill's shares being slashed to a present trading value of below 5c after trading as high as 20c early last year.

One of the share issues believed to have come under Companies Office scrutiny is 14 million shares issued to former and controversial Wilson Neill Ltd director Colin Herbert.

The file says the resolution to give Mr Herbert the shares, in settlement of consultancy fees, was made in April 1999.

But the 14 million 0.5c shares were not issued until February 17, 2000.

At the date of resolution Wilson Neill's shares were trading at 1.1c each, while at the date of issue they were trading at about 12c, a paper gain for Mr Herbert.

Other share issues under question are two 25 million-share loan settlements to the Ellis Family Trust, settlement of the purchase of Iguacu, a further issue to Mr Herbert and a 517,241 share issue as a "finder's fee" for Radionet.

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