Nuplex paying $3m to shareholders over disclosure breach

Photo / Kenny Rodger

Nuplex Industries will pay $3 million to shareholders as part of a settlement with the Securities Commission after failing to disclose it breached a debt covenant in 2008.

The company and regulator reached an agreement where people who bought and kept shares between December 22, 2008, and February 18, 2009, will be offered compensation, and the commission will get $150,000 to cover the costs of its investigation.

As part of the settlement, Nuplex acknowledged it should have made the disclosure and was in breach of the rules.

An independent committee set up by the Nuplex board "concluded that it was in shareholders' best interests for the company to settle with the commission and to do so along lines that benefited shareholders who may have been impacted by the company's inadvertent breach of continues disclosure rules," chairman Rob Aitken said in a statement.

"The company weighed up a number of factors including the potential costs of defending all the matters raised in the commission's proceedings and the ongoing distraction to the company and its board and management."

In April last year, the regulator accused Nuplex of breaking continuous disclosure rules when it didn't inform the market that it expected to breach a senior debt cover ratio covenant in its banking facility, and subsequently did.

When the charge was levelled at the board last year, the directors said they would "vigorously defend" the allegations, and led Nuplex director David Jackson to step down as a Securities Commissioner.

The allegations came at a time when Nuplex was reeling from the global financial crisis, which sent the kiwi dollar into a spiral and boosted the cost of the company's overseas debt. At the time, Nuplex had to raise funds through a discounted share issue to strengthen its balance sheet.

The shares fell 2.4 per cent to $3.63 in trading yesterday, and have gained 5.4 per cent this year.