Security setup dogs Wilson Neill receiver

By Deborah Hill Cone

Thursday 28th March 2002

The complex network of covenants and cross-guarantees linking Wilson Neill's assets will make the company's receivership very tricky, broker DF Mainland said yesterday.

The guarantees were the reason a consortium of investors backed off during the due diligence process and decided to leave the company alone.

But one investor in that consortium, who cannot be identified, is still in the running to buy Radionet, DF Mainland director Stuart Cairns said.

DF Mainland, described as the firm most able to "find opportunities in rubbish," was called in by Wilson Neill last year in a bid to put together a capital injection for the company.

As recently as a few weeks ago DF Mainland was said to be working on a rescue package but that fell over when during due diligence it was found to be impossible to release cash needed for the restructuring due to the restrictions from cross-guarantees.

Applications to have Wilson Neill wound up will be heard in the High Court at Auckland next month when it is expected a receiver will be appointed.

Meanwhile, DF Mainland sent out an email this week to assure shareholders and convertible noteholders it was not likely to be liquidated as a result of a dispute with a disgruntled Wilson Neill shareholder. Paul Bramley has filed an application in the High Court at Auckland attempting to wind up the firm over a statutory claim for $15,000 he claims DF Mainland owes him relating to the conditional sale of 400,000 Wilson Neill shares.

"As the conditions were not satisfied no sale took place and as such the former client remains a shareholder in Wilson Neill," the email from DF Mainland Group says.

The firm has taken legal advice over an article in the Independent newspaper last week which was headlined: "DF Mainland faces liquidation."

"I would like to categorically assure you that that is not the case. Moreover it is farcical to suggest that DF Mainland could be in such a predicament over what is a paltry sum," the email from DF Mainland Group says.

As a member of the Stock Exchange, DF Mainland must comply with strict capital adequacy requirements, which include having shareholders' funds of $1 million and liquid capital of 5% of gross external liabilities or $200,000, whichever is greater.

If any member firm suspects it is going to breach the capital adequacy rules it must advise the exchange, and Mr Cairns said this had not happened.

Comments from our readers

No comments yet