QC defends Vertex on prospectus

By ELLEN READ

As the Shareholders' Association canvasses support for legal action against Vertex, the plastics manufacturer has released a legal opinion defending its prospectus.

The Securities Commission has said that investment risks for two of the company's six business units were not adequately described in the prospectus and that prospective financial information for those business units should not have been described as forecasts.

Vertex listed on the Stock Exchange on July 1 after a $61 million share float. It issued a profit warning 9 1/2 weeks later, triggering an immediate 25 per cent drop in share price and wiping $14.7 million from the company's market capitalisation.

Auckland-based QC Julian Miles said there was no basis to believe the prospectus contained any misleading statements or omissions and the company was correct in describing prospective financial information in the prospectus for each of the six Vertex business units as forecasts rather than projections.

The Vertex board said the report, which it commissioned, added clarity to the situation, helping the company to focus on shareholder value.

A letter sent to Vertex shareholders by the Shareholders Association asked shareholders interested in exploring "other remedies" to contact Ross Dillon at the Shareholders' Association, to "co-ordinate any such further actions".

The former biggest shareholder in Vertex - Brook Asset Management - is also looking at legal action after the damning Securities Commission report.