Nerves delay Jade float

By PAUL PANCKHURST

In a second blow to attempts to revitalise the New Zealand Stock Exchange, Christchurch's Jade Software yesterday called off plans to list on the main board.

The announcement came three weeks after agritech company Tru-Test aborted its long-expected sharemarket float.

Jade blamed "equity market conditions". The decision was made at a board meeting on Monday.

The chief executive and major shareholder, Sir Gil Simpson, said "late 2003 or early 2004" were now possibilities for the initial public offering (IPO) first publicly proposed more than 14 months ago.

After a paucity of new listings last year, the Stock Exchange is working on a range of initiatives - investor education, corporate governance initiatives, an alternative board and a new exchange structure - to try to rejuvenate the market.

No comment was available from chief executive Mark Weldon yesterday on the latest float-that-isn't.

News reports last year estimated that a float would value Jade at $100 million to $150 million.

Yesterday, Simpson said the market was still cautious about technology stocks and nervous about war.

The board thought it "unlikely" the company would end up with a share price that reflected its value.

The decision to abort the listing comes at a cost to existing shareholders.

In 2001, the company issued $12.2 million of convertible capital notes to investors, including United States businessman Roger Bhole, fund manager I-cap and investment group Active Equities.

The notes will convert to shares as part of the IPO.

The exact terms of the notes are not public, but Jade chief financial officer David Lindsay confirmed yesterday that returns to the note-holders increase "the longer the company doesn't float".

In other words, the note-holders will get bigger shareholdings when the company lists - and further dilute existing shareholders' stakes.

Jade's decision may reflect a new caution in the market after incidents such as last year's profit warning by plastics maker Vertex just 9 1/2 weeks after listing.

The Vertex case is the subject of a Securities Commission probe.

"There's a massive degree of caution out there," said Andrew Bascand, a portfolio manager for Alliance Capital.

Within the sharebroking industry, some speculated whether Jade's performance, rather than market conditions, might have killed the float.

Simpson, however, was relentlessly upbeat.

"Operating in a very soft international IT market, we achieved a 14 per cent increase in gross revenue and a 31 per cent increase in revenue based on our Jade-based product lines," he said.

"We also substantially increased the proportion of business we do outside of New Zealand."

According to Simpson, the company had "suitable alternative funding plans" to continue with expansion this year, and "the ongoing support of investors".

Preparing for an IPO had been good for the company.

* In another case of a listing that will not happen: CeAnic's John Storey was mistaken when, in yesterday's Business Herald, he said the investment company would list in the next six to eight weeks.