In August last year the Landonline project - already more than a year behind schedule - slipped a further two months during its Dunedin rollout. The delay invoked monthly liquidated damages clauses against prime contractor EDS.
But what was not known at the time was that the damages were actually being paid by Terralink. In essence, one state-owned enterprise was making penalty payments to another.
Mr Traveller said the subcontract went sour because Terralink underestimated the number of survey marks to digitise and also the time needed to develop software to make the conversion.
Terralink had spent in excess of $5 million on software development which was owned by EDS.
More fallout is to follow. EDS has filed a $10 million claim with Terralink's receivers for the losses it has suffered because of the incomplete contract - although Mr Traveller said the exact losses could be established only once EDS had completed the Landonline project.
EDS has hired 41 of the 67 Terralink staff laid off when the company was put into receivership to complete the subcontract.
"We decided as a good corporate citizen we should honour our part of the contract even though a crown entity didn't," said EDS managing director Robert Gray.
He said EDS was looking to double the number of staff working on survey data conversion.
But as an unsecured creditor, EDS has to join the queue with others owed between $3 million and $4 million, behind preferential creditors and the Government, which has a debenture claim for a $1.5 million loan it advanced at the end of November.
About $800,000 in salaries and wages to staff has already been paid.
Mr Traveller said he hoped to realise about $10 million from Terralink debtors plus the proceeds of the sale of the business to New Zealand Aerial Mapping (NZAM) and Animation Research, due for settlement tomorrow.
The sale was subject to a High Court injunction application, dismissed on Monday by Justice John Priestley. Publication of the sale price was suppressed.
Mr Traveller defended his actions during the sale process, saying the option taken by the NZAM consortium to make a cash offer was open to all bidders.
He was unable to tell other bidders about the unconditional offer because it was subject to a confidentiality agreement and would be withdrawn if any one else undertook due diligence.
While 100 parties expressed interest in buying Terralink, Mr Traveller said in the end there were only a dozen indicative bids.
Compared with independent valuations he said the sale price was significantly more than expected.
The decision not to pursue other bids was based on an assessment that none of the other offers was likely to result in a better price.
"It's an outstanding result. It's unfortunate a few aggrieved parties have taken such action."
Full text of the High Court judgment: Ocilla Investments Limited (Plaintiff) and Richard Dale Agnew and Gary Traveller as Receivers of Terralink Limited (First Defendants) and NZ Aerial Mapping Limited and Animation Research Limited (Second Defendants)(Requires the free Adobe Acrobat Reader)
