‘Extreme’ cash burn: Wynyard directors reject FMA criticism
Directors of Wynyard Group knew about the company’s ‘‘extreme’’ cash position soon before it collapsed but didn’t tell the market until too late, the Financial Markets Authority (FMA) says.
Wynyard was the biggest tech-wreck in recent years, going into liquidation in February 2017 owing about $177 million to unsecured creditors, with little of it recovered. It also raised $171m from shareholders when it listed on the New Zealand stock exchange.
The FMA interviewed three directors and examined reports and Wynyard’s market announcement, which the FMA said understated how fast cash was drying up until the shock announcement of voluntary administration in October 2016.
In a statement, the directors of Wynyard said they welcomed the FMA’s ‘‘long overdue’’ conclusion that no-one breached the Financial Markets Conduct Act, but they rejected ‘‘any suggestion that there was not ongoing compliance with the continuous disclosure requirements’’.
Leading up to collapse on August 24, 2016, Wynyard directors said they expected to be ‘‘cash positive’’ by the end of that year, and a loan of $10m was available to be drawn down. But neither happened and the position deteriorated.
The crisis deepened and directors appointed voluntary administrators on October 25.
The FMA said the September board reports stating the company’s ‘‘extreme’’ cash position should have been announced.
But Wynyard was no longer trading and the FMA said it was unlikely to win any legal action against directors over the failure to make full market announcements.
Wynyard’s statement was prepared by a legal firm on behalf of the directors at the time – Craig Richardson, Guy Haddleton, Louis Grever, Martin Riegel, Richard Dellabarca and Fiona Oliver.