$23m Yealands payment claim
The trustees of the Marlborough Electric Power Trust face a claim over a $23 million payment made to Peter Yealands when he sold his remaining shares to Marlborough Lines.
Wellington lawyer Michael Wigley said he has written to the trust (MEPT) and Marlborough Lines that he has been instructed to begin court proceedings against them.
Wigley, who says he represents a group made up of mainly Marlborough residents concerned with the actions of Marlborough Lines, claims the company should never have bought Yealands Wines in the first place.
In 2015, Marlborough Lines paid $89m for 80 per cent of Yealands Wines, a major wine exporter based near Seddon.
It has since taken full ownership, including buying the outstanding shares of founder Peter Yealands months before it was revealed that both he and the company were being prosecuted for concealing the adding of sugar to wine destined for the European Union.
MEPT chairman Ian Martella said in a statement that the trust was ‘‘satisfied that [Marlborough Lines] got appropriate legal advice, and appropriate share valuation advice’’ in the purchase of the shares.
However, Wigley said that documents the trust released to Kaikoura MP Stuart Smith showed the trust had seen neither the legal advice or the share valuation which Marlborough Lines used in the purchase.
‘‘I can’t see how the trustees can say they can be satisfied with that transaction when they haven’t even seen or obtained copies of the relevant documentation.’’
Wigley is claiming that Peter Yealands was paid ‘‘at least’’ $14m more than he should have been, based on earlier share transactions by Marlborough Lines and Yealands.
In December, Marlborough Lines chairman David Dew said Peter Yealands’ shares were worth $28m, however, the winery’s founder was paid less to settle a potential breach of warranties claim.
This was because Peter Yealands did not tell Marlborough Lines about the concealed sugar activity when it was negotiating to buy the company.
Wigley said based on the price Marlborough Lines paid to buy the shares owned by the former Yealands Wines chief executive and as part of a capital injection, the price per share was half that paid to Peter Yealands in 2018.
‘‘It’s looking like he was paid about $14 million too much, and then you’ve got the issue around settling the claim against Peter Yealands for breach of warranties,’’ Wigley said.
Court proceedings would bring a claim against the trustees and the company, in an application made on behalf of Marlborough power consumers. As well as claiming reimbursement for losses, the proceedings would include an application for more documents and for the appointment of an advisory trustee to monitor the MEPT.
Wigley’s clients also believe a payment of more than $330,000 paid to Marlborough Lines managing director Ken Forrest for backpay ahead of a salary increase was highly unusual and should be repaid. Marlborough Lines has defended the payment, and said it had not given Forrest a pay rise since 2011, because it was too busy.
Previously Wigley has refused to disclose the identity of his clients, but said two would be named as part of the action. A number of witnesses would supply affidavits, including professional directors, a wine industry expert and a forensic accountant ‘‘all independent from the group’’ of clients.
Nicki Stretch, deputy chairwoman of the MEPT, confirmed it had received the notice from Wigley but declined to comment. Dew has not responded to a request for comment.