Resins manufacturer Nuplex estimates spending $1.3 million to defend charges laid against the company and six current and former directors by the Securities Commission. In April the Securities Commission filed civil proceedings alleging Nuplex breached it
Resins manufacturer Nuplex estimates spending $1.3 million to defend charges laid against the company and six current and former directors by the Securities Commission.
In April the Securities Commission filed civil proceedings alleging Nuplex breached its continuous disclosure obligations under the NZX Listing Rules and the Securities Markets Act by failing to disclose to the market a breach of a banking covenant.
The commission alleges Nuplex shares would have plunged by as much as 30% had the company informed the NZX it was in breach of its banking covenants when the information first became available to its directors.
Nuplex has denied the allegations and said the company and its directors would defend themselves vigorously.
At today’s annual shareholders meeting, chairman Rob Aitken said the period under scrutiny – late 2008 to early 2009 – was a time when “many sound manufacturing companies were concerned that their bank covenants contained ratios that might become impractical as the global financial crisis affected their markets.
“Nuplex was one of these, and accordingly towards the end of 2008 we opened discussions with our banks to loosen or waive covenant compliance.”
“The board is confident that the actions it took to deal with the crisis - including amending bank covenants, raising capital, restructuring operations and improving earnings - preserved and promoted shareholders` interests.”
He said the directors concerned and the company acted in full compliance of the relevant legislation, stock exchange requirements and accepted commercial practice.
“We are entirely confident of our and the company’s position.
“It is therefore regrettable that the directors and Nuplex have been subjected to proceedings which are not in the shareholders` interests and which it is estimated will cost the company a sum in excess of $1.3million to defend.”
Meanwhile, Nuplex said trading conditions remained challenging and warned about high exchange rates.
Guidance for the 2011 financial year, based on average exchange rates in the first quarter, was earnings before interest, tax, depreciation and amortisation in the range of $135 million to $145 million, with net profit in a range from $68 million to $75 million. In 2010 ebitda was $139.4 million and net profit $64.2 million.
Nuplex shares remained unchanged at $3.46.
