Reg­u­la­tor ques­tions Quin­tis

The West Australian - - WEST BUSINESS - Sean Smith

The cor­po­rate reg­u­la­tor has been prob­ing Quin­tis since April, de­mand­ing doc­u­ments and quizzing direc­tors and ex­ec­u­tives over the san­dal­wood grower’s fall from favour.

Quin­tis con­firmed the in­ves­ti­ga­tion yes­ter­day in an over­due an­nual re­port which showed the com­pany booked a full-year loss of nearly $420 mil­lion af­ter slash­ing the value of its farflung Aus­tralian san­dal­wood plan­ta­tions to re­flect less op­ti­mistic fi­nan­cial as­sump­tions.

The loss also in­cluded a $154 mil­lion im­pair­ment re­lated to the Perth-based com­pany’s hyped US phar­ma­ceu­ti­cal sub­sidiary, San­talis, as well as a trad­ing deficit by Quin­tis’ Mt Ro­mance san­dal­wood oil business near Al­bany.

Direc­tors said in the an­nual re­port the Aus­tralian Se­cu­ri­ties and In­vest­ments Com­mis­sion had served var­i­ous statu­tory no­tices against Quin­tis de­mand­ing doc­u­ments and re­quir­ing board mem­bers and ex­ec­u­tives to ap­pear separately be­fore the reg­u­la­tor for ques­tion­ing.

“The com­pany and its direc­tors and of­fi­cers are co-op­er­at­ing with ASIC in re­la­tion to these is­sues,” they said.

Quin­tis did not dis­close the thrust of the ASIC in­ves­ti­ga­tion.

But the group has been hounded by bad news since a bru­tal re­port by US short-seller Glau­cus Re­search in March com­pared it to a Ponzi scheme and ques­tioned its trad­ing model.

With in­vestor con­fi­dence fur­ther tested by the de­par­ture of found­ing chief ex­ec­u­tive Frank Wil­son and ques­tions over its cor­po­rate gov­er­nance, Quin­tis shares were shred­ded be­fore man­age­ment sought the pro­tec­tion of a trad­ing halt in May.

The com­pany had ex­pected to by now an­nounce de­tails of the re­cap­i­tal­i­sa­tion it needs to sur­vive. How­ever, yes­ter­day it in­stead dis­closed a new $US20 mil­lion ($26 mil­lion) short-term fi­nance fa­cil­ity with bond­hold­ers, sug­gest­ing the re­cap­i­tal­i­sa­tion has again been de­layed.

The an­nual re­port’s re­worked ac­counts will at least pro­vide the bond­hold­ers and po­ten­tial new in­vestors with more clar­ity around the value of Quin­tis.

Quin­tis’ rev­enue, which is de­rived from the sale of plan­ta­tions and san­dal­wood prod­ucts and fees from plan­ta­tion man­age­ment ser­vices, nearly halved to $97.4 mil­lion.

The loss of $416.8 mil­lion for the year to June 30 in­cluded a $307.4 mil­lion write-down on the value of its its plan­ta­tions to $342.8 mil­lion, “driven pri­mar­ily by changes in key in­puts to the val­u­a­tion model” and “on­go­ing as­sess­ment’ of the as­sump­tions be­hind the val­u­a­tions.

The more sober out­look also spilled over into San­talis, where direc­tors re-eval­u­ated the sub­sidiary’s prospects of suc­cess on the back of “additional mar­ket re­search and bench­mark­ing data” about its prod­ucts.

Quin­tis has only sur­vived with waivers from bond­hold­ers owed more than $300 mil­lion since de­fault­ing on the terms of its fund­ing in May.

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