Ralec set the first earn-out target for the Clear Grain Exchange which the trading platform failed to meet under NZX's ownership, says NZX's former head of strategy Heather Kirkham.
Kirkham told the High Court yesterday that she thought the target, for 1.5 million tonnes of grain traded in its first year, was optimistic and hadn't come from NZX's due diligence team. She was being cross-examined by Georgia Berlic, counsel for Ralec, in the fourth week of the hearing between NZX and Ralec.
The stock market operator is suing Dominic Pym, Grant Thomas, and their companies is Ralec Commodities and Ralec Interactive for providing "wildly inaccurate" forecasts prior to NZX buying the Australian grain trading platform in 2009. Ralec's counterclaim says NZX and former chief Mark Weldon under-funded the business, meaning it couldn't meet earn-out targets.
NZX bought Clear for A$7 million in October 2009, with two earn-outs of A$7 million tied to performance. The initial target for the first earnout was trading of 1.5 million tonnes of grain by June 30, 2010. If that was missed, Ralec could still get the earn-out, provided Clear reached 3 million tonnes by June 2011 or 4.5 million tonnes by June 2012. The second earn-out payment was based on NZX being able to create a successful agri-portal.
Kirkham said she remembered consistently being told by Thomas and Pym that 1.5 million tonnes of grain traded through the platform was achievable.