Investment company in receivership

Directors say poor economic conditions and loss of ANZ's support led to Aquiline Holdings' demise. Photo / Kenny Rodger

Hawkes Bay investment company Aquiline Holdings has been placed in receivership by ANZ Bank after failing to fulfil the bank's three-year restructuring scheme.

It had reduced bank debt from $65 million to $8.8 million since 2008 but couldn't raise new funds and was heading towards breaches of its banking covenants when Korda Mentha's Brendon Gibson was appointed receiver last month.

At one stage Aquiline owned 14 small-to-medium enterprises in the clothing, electronics, chemical and paint, office products, storage and foodstuffs sectors.

As part of the bank scheme it had converted some debt to shares and the bank forgave some amounts. It had also sold businesses including its prize asset Samsung and Kenwood technology and electronics distributor Radiola Corporation. ANZ bought Radiola as part of the restructuring scheme but is now liquidating the company after selling its assets to Samsung. Without Radiola, Aquiline's group income reduced by 65 per cent.

Chief executive David Oldershaw and fellow directors Graham Cowley and Russell Smith told investors last month it was unlikely they would see any return from the company. Oldershaw said Aquiline had been cash-flow positive and had generated a trading profit during the past financial year after the sale of Woodhouse Apparel.

"We are devastated that efforts of the last five years had not resulted in a better outcome for shareholders," he said.

He blamed the impact of the worldwide economic downturn on businesses generally and the withdrawal of the bank's support for the company's demise. He said Aquiline had been unable to provide a recapitalisation and debt repayment plan to the bank by a June deadline after trying for months to find new sources of capital.

The remaining companies, chemicals producer Clark Products, foodstuffs distributor Harvest Traders and Stowers Containment Solutions were still trading but would be sold.

Aquiline's death spells the end of a long and sorry saga which has seen the company fall foul of the Securities Commission over two prospectus issues and run at a loss for much of its latter years.

Shareholders vented spleens at recent annual meetings, questioning why management took 14 successful businesses out of their family-type environment and financial framework and imposed their own corporate management style on each of them from a central Napier head office.

They have also questioned why they stripped the businesses of cash reserves, used overdrafts and debtors' accommodation to their limits and rationalised stock to suit balance sheets rather than customers.

Aquiline blazed into the headlines in 2001 when its chairman and former Air New Zealand chief executive Jim Scott introduced a capital register for the then 5-year-old company, raising $20 million to buy the stable of businesses through the issue of 9.19 million shares at $1.75 a share with a guaranteed 25 per cent return.

Scott also put money in and he and his wife Sylvia still own 38.23 per cent of the company.

Aquiline was taken to task by the Securities Commission in October 2003 for breaching securities obligations related to information in the prospectus and advertisements for its float. The company had to accept enforceable undertakings from the commission to satisfy its concerns. But in 2004 it again came to the attention of the commission for trying to raise a further $90 million without explaining how it had valued the share price. The company withdrew the prospectus.

Scott continued to confound investors and the financial community and media with his undisclosed formula for valuing the shares. By 2004 he had reset the share price several times from the original $1.75 to $20 a share. He later blamed the Securities Commission investigation for a run on funds and erosion of the share value.

Scott has not been active in the company's affairs since 2008 when he quit as chairman, having moved two years earlier to Queensland. At one stage he brought another former Air New Zealand chief executive Jim McCrea on to the Aquiline share register and gave him a directorship but McCrea also left.

Aquiline Holdings
* Napier headquartered investment company.

* Once owned a stable of 14 companies in the clothing, electronics, chemical and paint, office products, storage and foodstuffs sectors.

* Receiver appointed last month.

* Remaining companies Clark Products, Harvest Traders and Stowers Containment Solutions to be sold.