SLX3 in­vest­ments are ob­scure

Kapi-Mana News - - NEWS - By MICHAEL KOPP

The price of shares in the pub­licpri­vate broad­band com­pany Smartlinx3 has plum­meted by 80 per cent, and with it the value of a com­pany that has re­ceived pub­lic in­vest­ment of per­haps as much as $2.5 mil­lion.

SLX3’s pri­vate in­vestors also re­ceived a Govern­ment grant of $2.4 mil­lion to pro­vide broad­band in­fra­struc­ture and ser­vices that to this day are not pub­licly ac­counted for.

Se­crecy sur­round­ing SLX3 has kept the pub­lic in the dark about just how much each four pub­lic in­vestors: Hutt Mana Char­i­ta­ble Trust (HMCT), Hutt City, Up­per Hutt and Porirua Coun­cils have re­ally in­vested.

The de­cline in book value is not only the re­sult of the gen­eral eco­nomic down­turn.

How­ever, the Au­dit Of­fice has just con­firmed to Hutt City Coun­cil that its $465,000 in­vest­ment in SLX3 is now worth only $194,000.

Ear­lier this year, HMCT’s $825,000 in SLX3’s shares were de­val­ued to just $145,707 due to the com­pany’s losses.

Up­per Hutt City Coun­cil was not able to im­me­di­ately say what its share value or pos­si­ble de­cline was. Porirua City Coun­cil said it did not have any in­for­ma­tion on SLX3 at that level of de­tail in its pub­lic re­ports.

Shares that pub­lic in­vestors once pur­chased for up to $200 each – which never made a profit and only be­came cash-flow pos­i­tive af­ter dras­tic cost-cut­ting and re­peated pub­lic cash in­jec­tions – dropped to just $20 a share at the most re­cent coun­cil pur­chase ear­lier this year.

Yet the coun­cils con­tin­ued in­ject­ing cap­i­tal as re­cently as March of this year, when they spent an­other $90,000. HMCT de­clined to join them. The deal was sup­posed to be con­tin­gent on SLX3 rais­ing $320,000 in the is­sue. It is not known whether they did.

SLX3 last month asked the pub­lic in­vestors for an­other $ 500,000 to pay back a loan to the failed South Can­ter­bury Fi­nance on which it had de­faulted but got con­tin­u­ances through the re­ceivers of SCF. The com­pany sug­gested that the coun­cils could take over the ser­vic­ing of the debt.

It is not known how the other three in­vestors re­sponded, but HCC said no.

Coun­cil­lors have said SLX3’s af­fairs are so se­cre­tive it is im­pos­si­ble to have proper pub­lic over­sight of the in­vest­ments.

And the Au­dit Of­fice ap­par­ently agrees. Its re­port to HCC said that SLX3 should have pro­vided its 2010 an­nual re­port, due in June, by now, but hasn’t.

The au­di­tor made ref­er­ence to pre­vi­ous coun­cil pa­pers about SLX3’s ‘‘pos­i­tive cash flow’’, but he ques­tioned whether there was any ev­i­dence of that.

By mid-2010 SLX3 was so re­duced in in­come that it laid off all its staff and con­tracted its op­er­a­tions to Ci­tyLink, the Wel- ling­ton pi­o­neer broad­band com­pany.

The coun­cils that were pro­vid­ing back­ing said they were giv­ing the $270,000 ad­di­tional fund­ing in SLX3 on the prom­ise that it would en­sure SLX3’s place in the Govern­ment’s ul­tra-fast broad­band ini­tia­tive. But as re­ported re­cently, there is no chance of that.

Last month there were calls by Hutt City councillor Max Shier­law, a long-time critic of SLX3 and coun­cil in­volve­ment, for the com­pany to be­come a coun­cil­con­trolled or­gan­i­sa­tion af­ter the res­ig­na­tion of HMCT’s nom­i­nated di­rec­tor, Leo Austin.

Mr Austin said there are ‘‘some mat­ters’’ the share­hold­ers had to sort out.

HMCT has now ap­pointed a re­place­ment, Tracy Abbott, of Wadestown, who is de­scribed by HMCT chair­man Ian Hutchings as hav­ing been an ad­viser to the trust.

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.