Friday 25th November 2011
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Energy Mad, the energy-efficient light bulb company, has lost a High Court bid to quash a demand for payment from a firm that helped arrange funding prior to its initial public offering and NZX listing.
Energy Mad was ordered to pay the $62,381 outstanding under a deed of settlement with BMAC Global Property within 10 working days, Associate Judge Osborne said in his Nov. 2 judgment.
The light bulb company also will have to meet BMAC’s costs.The company raised $5 million in its IPO, only half what it had sought, and its shares listed on NZX on Oct. 19 at $1. They last traded at 85 cents, giving the company a market value of $32 million.
According to the company’s prospectus, its bank withdrew its working capital at short notice in late 2008 as the global financial crisis began to evolve.
That starved the company of funds to pay for manufacture of bulbs prior to payments by customers.
The sudden withdrawal of the facility left Energy Mad with “severely constrained working capital,” the prospectus said. As a result it entered talks with an Australian firm, Winteray Capital, in 2009 though Winteray subsequently went into receivership.
The prospectus makes no mention of BMAC, though the two companies agreed a deed of settlement relating to help in refinancing its convertible notes, under which Energy Mad would make three monthly payments of A$7,797, with the balance of the total A$72,976 owed paid shortly thereafter.
According to Judge Osborne’s judgment, Energy Mad made the first payment on time, was late with the second and paid nothing further.
When BMAC issued a statutory demand for the money owed, Energy Mad applied to the High Court seeking the demand be set aside and claiming there was a “substantial dispute” over the debt.
He said Energy Mad hadn’t quantified its counter-claim.
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