Just Water chief slams NZX for 'price gouging'

NZX "engaged with Just Water", as it was with all its customers.

Tony Falkenstein, chairman and chief executive of NZAX-listed Just Water International [NZAX: JWI], has again accused stock exchange operator NZX of price gouging.

At the water cooler company's annual meeting in Auckland yesterday, he said [NZX], which was required to review the five resolutions for the annual meeting, charged excessively for the privilege and he'll be referring it to the Commerce Commission for "continuing its practice of abuse of its monopoly position as well as price gouging."

The NZX invoiced Just Water a bill of $650 per hour for 9.5 hours for reviewing five resolutions and later reduced the rate, but not the hours, he said.

"Although in itself not a bill that will send the company broke, it is a continuation of the monopolistic and bullying tactics they use to extract fees from members," he said.

NZX's response to the criticism is that a number of Falkenstein's comments are inaccurate and that it was "engaged with Just Water", as it was with all its customers.

Falkenstein made similar price-gouging accusations about the NZX in June when it gave two weeks notice to those listed on the NZ Alternative Market (NZAX) that their annual fees would rise to $25,000 from $5375 from July 1. The five-fold increase followed the launch of its new alternative market, NXT, which has listing costs of $30,000. So far only two companies have listed on the new market launched in June – G3 Group and Snakk Media.

Falkenstein had originally intended delisting Just Water and going with an alternative exchange but said the process proved more complex than first thought and it had now decided to stay listed on the NZAX.

"This is a satisfactory exchange and could have been improved with a few changes rather than go with the NXT which seems to be a platform devised by two economists and a lawyer with no commercial rationale, " he said. "In my opinion, it is doomed to failure."

NZX head of communications Kate McLaughlin said the success of NXT will be judged in five years, as anyone building markets for the long term would expect. "NXT is an innovative, world class new market which is not going to appeal to everyone."

Falkenstein said Just Water had negotiated a two-year grace period from the NZAX fee hike and NZX had stated it will continue to support that alternative market into the future.

Falkenstein's investment vehicle, Harvard Group, made a full takeover bid for Just Water last October at 15c a share, trumping an indicative offer of 14.6c from an unidentified overseas buyer. He fell short of the target to take the company private, acquiring about 8% of the shares he didn't already own.

He said today he was delighted that shareholders, holding about 20% in the company, either took a long-term view on the investment or decided they would get an increased return if they remained as shareholders. The Milford Active Growth Fund came on to its register during the takeover period, purchasing more than three million shares. The shares are trading at 17c.

Falkenstein said debt reduction had been its major objective with the $10.8 million proceeds from the sale of its Australian operation resulting in a $63,000 net funds balance at the end of the June 30 financial year.

After balance date it purchased a building for Just Water's head office and bottling plant for $3.3 million which is now being refurbished. No dividend will be paid this year.


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