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Ralec played up Graincorp relationship, concealed internal grumblings: Weldon

Former NZX chief executive Mark Weldon has been giving evidence in a multimillion dollar court case today. File photo / Dean Purcell
Former NZX chief executive Mark Weldon has been giving evidence in a multimillion dollar court case today. File photo / Dean Purcell

Former MediaWorks chief executive Mark Weldon has been thrust into the public eye again, this time to answer questions in a courtroom witness box.

Weldon appeared in the High Court at Wellington today to answer questions from about his time as the chief of stock exchange operator NZX.

It's week three of the lawsuit - expected to last nine weeks - between NZX and Melbourne company Ralec, which are suing each other.

NZX bought Australian grain trading company, Clear Grain Exchange, from Ralec - headed by a former AFL coach Grant Thomas - in 2009.

NZX claims Ralec's former owners, Grant Thomas and Dominic Pym, and their companies Ralec Commodities and Ralec Interactive, misled them with "wildly inaccurate" forecasts.

Ralec claims NZX, which bought the platform for $7.53 million with the potential for further earnouts, failed to fund the exchange sufficiently.

NZX is suing for between $22.27 million and $40.46 million, and Ralec has countered with a suit totalling $15.06 million plus bonuses.

Weldon was chief executive of the NZX for 10 years, resigning in 2012.

He became chief executive of MediaWorks - owner of TV3 and Newshub - in August 2014 but on May 4 resigned, five days after the Weekend Herald broke the news that TV3 star Hilary Barry has resigned from the network after 23 years of service, and just hours after the company launched a new channel, Bravo.

Ralec's lawyer has painted Weldon as having been fixated on building Clear Grain Exchange into a global commodities powerhouse, ignoring Ralec's advice on the outlook for the business and keeping his own board in the dark.

Weldon told the court today that Thomas and Pym, had given NZX an annual forecast of 1.5 million tonnes of grain to be traded using the platform for 2010.

"It was very clear in meetings they expected Clear to achieve at least 1.5 million tonnes," Weldon said.

"They referred to this several times including at dinner, and separately, Thomas said it was a conservative estimate."

Weldon said Thomas and Pym had characterised the relationship between Clear and Graincorp as positive and NZX wouldn't have gone ahead with the acquisition if that hadn't been the case. A due diligence document from Clear had said Graincorp was targeting volumes of 1 million tonnes to trade on the Clear Grain Exchange, he said.

"If there was one fact which, if we had not believed it to be true we would not have bought Clear, it was whether Graincorp would trade on the market," Weldon said.

"All the projections and modelling assumed Graincorp themselves would be trading via Clear, and it was confidence in this, as stated specifically in the due diligence document, that led us to affirm our baseline tonnes traded target. Graincorp trading on the market was absolutely fundamental."

Weldon said NZX was not told about internal opposition within Graincorp towards trading using the Clear platform. Instead, communications from Clear both in written documents and in the language used in meetings was about the strength of the relationship and the support Graincorp had for Clear.

Weldon said he was told by Clear that there wouldn't be any increase in costs to achieve the forecast increase in trading volumes, and this was repeatedly explained at meetings.

Weldon also denied Thomas had told him, at a meeting on July 17, 2009, that NZX would need to invest $5.38 million in marketing and development for Clear. And he said Thomas had emphasised Clear's positive relationships within the grain industry.

- BUSINESSDESK and NZ Herald staff

- NZ Herald

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