Regulator questions Quintis
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.