Charges waste of money, says Nuplex chief

John Hirst. Photo / Richard Robinson

The Securities Commission's proceedings against Nuplex will end up "wasting a lot of taxpayers' money and shareholders' money", says the firm's managing director John Hirst.

Yesterday Hirst, who retires from Nuplex at the end of next week, told the Herald that the commission's allegations signalled "more turmoil" for the company that was badly affected last year by the global downturn.

Hirst said Nuplex would "vigorously defend" the charges laid against the company and its directors.

Nuplex's share price closed down 7c at $3.40 yesterday.

The commission alleges that between December 2008 and February 2009 Nuplex breached continuous disclosure rules set down by the stock exchange and Securities Markets Act of 1988.

Continuous disclosure rules require listed companies to immediately inform the market of any information that may affect its share price. It was the first example of a continuous disclosure case being brought by the commission.

The proceedings against Nuplex involve an alleged failure to disclose to the market a breach of its banking covenant - controls set in place by banks to ensure debt repayment.

"The commission alleges that from December 22, 2008 until 19 February, 2009 Nuplex breached its continuous disclosure obligations under the NZX listing rules and the Securities Markets Act 1988 by failing to disclose to the market a breach of banking covenant, and that both Nuplex and the directors are responsible for this failure," said Securities Commission chairman Jane Diplock. In a statement Nuplex said it took its continuous disclosure obligations seriously, and believed it had properly complied with them at all times.

"Regrettably, the commission's interpretation of the continuous disclosure required by the listing rules and the Securities Markets Act differs from the company directors' considered judgment at the relevant time," the statement said.

The commission was seeking declarations of contravention, pecuniary penalties - with a maximum penalty of up to $1 million for each defendant - and compensatory orders.

The commission said it would lodge a statement of claim with the Wellington High Court.

Until yesterday David Jackson - also a director of Fonterra, Pumpkin Patch, and the New Zealand Refining Company - was himself a member of the Securities Commission.

"I have tendered my resignation [from the commission] effective last night," Jackson said yesterday.

Commerce Minister Simon Power said he had received Jackson's resignation shortly after the commission announced its proceedings against Nuplex on Tuesday evening.

In February 2009, when Nuplex did announce it was in talks with banks over its cash advance facility, its share price dropped 35c in one day.

Those talks followed a half-year drop in profit of 76 per cent as demand for Nuplex's products fell during the global financial crisis. But in February the company came back from the brink to report some of the best results in its 54-year history as a listed company. additional reporting NZPA