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NZX's Weldon saw 'Agri-Bloomberg' in Clear Grain Exchange: Ralec case opens

Former NZX chief executive Mark Weldon had valued the potential of the grain exchange, which he described as an 'Agri-Bloomberg'. With special feature audio.

Sophie Boot
Wed, 04 May 2016

Former NZX chief executive Mark Weldon regarded the Clear Grain Exchange as an 'Agri-Bloomberg' and was uninterested in previous owner Ralec's view of its prospects, Ralec's counsel told the Wellington High Court in opening submissions.

Facing claims from NZX counsel that Ralec had produced "wildly inaccurate" forecasts of future performance, Ralec's QC, Tim North, said the Australian grain exchange's former owners had not made false representations to NZX's board, which acquired the business in 2009.

Rather, Mr Weldon had valued the potential of the grain exchange, which he described as an 'Agri-Bloomberg', at $750 million to $1 billion, a figure derived from 1% of financial software and data provider Bloomberg's value.

That perception was the driver for the acquisition, Mr North said. Weldon, who now heads the embattled MediaWorks business, has already been in the news this week amid speculation, quashed by his chairman, that his job there is in jeopardy after an outflow of high-profile staff and a series of public relations disasters.

Records of the financial status of the Ralec assets were provided before acquisition showing Clear Interactive had made a loss of $4.2 million in 2009 while Clear Commodities had made a profit of $88,000, Mr North said.

"NZX, in particular the management team, knew this business could not continue without the benefit of additional financing and resourcing," Mr North said.

Mr Weldon had been eager to acquire the platform, Mr North said, and the board hadn't considered projections made by Clear in its decision-making.

"Mr Weldon was 100% committed in relation to the acquisition on June 2, 2009, before any representations to the board," Mr North said. "There was a difference between what the board was informed about and what Mr Weldon and his team knew. The representations were never things the board relied upon because they weren't told about them," the court heard.

Mr Weldon is due to give evidence in the third week of the trial.

Ralec is facing stock market operator NZX in what's expected to be a nine-week trial over NZX's purchase of Clear Grain Exchange in October 2009. NZX is suing for between $A20.7 million and $A37.6 million, and Ralec has countered with a suit totalling $A14 million plus bonuses.

NZX claims Clear's former owners, Grant Thomas and Dominic Pym, and their companies Ralec Commodities and Ralec Interactive misled NZX when it bought the commodities trading platform with what it says were "wildly inaccurate" forecasts. Ralec subsequently filed a counterclaim against NZX, later adding the market operator's former chief executive Mark Weldon to the list of defendants. It claims NZX, which bought the platform for $A7 million with the potential for further earnouts, failed to fund the exchange sufficiently. The case pre-dates much of NZX's management, having first hit the courts in 2011.

The grain exchange was set up to take advantage of the break-up of the Australian Wheat Board monopoly and was looking to capture a slice of the $A100-150 million growers spent annually on commissions to sell their products.

NZX wanted to use the exchange to expand its agricultural products offering and use it as the basis for an agri-portal for spot market and commodity data, though that hasn't eventuated due to Clear's muted trading volumes.

Both sides have requested the proceedings be livestreamed to clients and lawyers who aren't in the courtroom, which Justice Robert Dobson is considering.


Sophie Boot
Wed, 04 May 2016
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NZX's Weldon saw 'Agri-Bloomberg' in Clear Grain Exchange: Ralec case opens