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NZ Police undecided on whether to buy back Wynyard software for $1

Tuesday 25th October 2016

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New Zealand Police is undecided on whether to exercise a $1 buyback option for Wynyard Group's digital forensic software which it sold to the failed intelligence software developer in 2012. 

Auckland-based Wynyard's board today appointed KordaMentha’s Neale Jackson and Grant Graham as voluntary administrators after deciding a $10 million loan from shareholder Skipton Building Society or raising new debt or equity wasn’t "in the best interests of the company, its shareholders or other stakeholders." The NZX-listed shares have now been suspended, having been in a trading halt for the past week. 

The shares last traded at 21.5 cents, valuing Wynyard at $38.5 million, having sold in an initial public offering at $1.15 in mid-2013. 

Wynyard's insolvency is among the conditions that would trigger NZ Police's right to buy back the intellectual property rights attached to the digital forensics product and any developments for $1, though the law enforcement agency hasn't made up its mind on whether to exercise that option. 

"Police are aware of the announcement made by Wynyard Group this morning," a spokeswoman said in an emailed statement. "We will work closely with the administrators before taking any decisions."

Wynyard stopped investing in the digital forensics market earlier this year after an operational review led to trimming back the business into two lines. 

In a separate statement, KordaMentha's Graham said Wynyard had effectively exhausted its options to fund its working capital, and that the administrators will focus on "identifying any strategies to realise value for the intellectual property Wynyard has built". A meeting of creditors will be held on Nov. 4, with a second 'watershed' meeting required within 25 working days after that. 

Wynyard was spun out of Christchurch's Jade Software in early 2013 to free the intelligence software developer pursue what had been rapid growth for the subsidiary. The IPO raised $65 million for Wynyard, though the company only kept $26 million to fund its growth ambitions, with the remainder paying out Jade for the intellectual property and covering outstanding debt.

The split also included a services agreement where Wynyard would pay Jade for the sale and support of licences, managed services, development, consulting services and administrative support. The other leg of the deal would see Jade buy development services from Wynyard. 

Wynyard paid $3.8 million to Jade in the six months ended June 30, while receiving $1 million in revenue from its former parent. 

Jade didn't immediately respond to inquiries about the impact of Wynyard's voluntary administration.

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