Aquiline lays out list of woes

Aquiline Holdings is talking to its bankers because poor results mean it is now breaching bank covenants.

The Hawkes Bay investment company, founded by former Air New Zealand chief executive Jim Scott, buys up small to medium-sized firms, making them subsidiaries.

Last year it cancelled a planned $90 million public share offer that was later found to have breached securities law and regulations. It has previously been criticised for the practice of directors setting the company's share price.

In quarterly results published yesterday, the directors lay out a list of woes, with its larger investments from last year the hardest hit.

"It is now clear that the decline in performance experienced since the fourth quarter of 2003-2004 has been deeper and more serious than we first recognised," they say.

Aquiline's core business is in import and distribution. It owns Marsanta Foods, Instant Office Products and Woodhouse Apparel. Another subsidiary, Radiola Corporation, is the NZ importer and marketer of Samsung consumer and IT products.

Yesterday Aquiline announced third-quarter, after-tax losses for the nine months to March 31 of $551,000, down 129 per cent from the same period last year.

The hit on cashflows meant it was breaching banking covenants.

"AHL's poor performance has required the company to engage with its bankers. In line with its efficient cost of capital policies AHL carries a large amount of bank debt in its balance sheet."

These facilities were based on a historic cashflow covenant structure that the company was now unable to meet.

"The process of negotiation with the bank is ongoing. The discussions have been constructive."

Last year the company told a briefing in Auckland that it was predicting a 40 per cent annual return to shareholders over the next two financial years.

Being on the Unlisted trading platform had "not materially assisted with liquidity".

"The directors consider that in AHL's present circumstances there is no benefit to shareholders in the extra visibility associated with being registered for trading on Unlisted."

Aquiline's investor relations manager, Brenda Crene, told the Herald this week that the company had delisted from Unlisted because of uncertainty surrounding the Government review of the trading platform, as well as a planned Unlisted fee increase.

Aquiline shares had also not traded as much as the company had hoped.

State of play

* Investment company Aquiline Holdings says poor results mean it is breaching banking covenants.

* Aquiline has now removed its shares from the Unlisted trading platform.

* Directors have said there is no benefit to shareholders in the extra visibility associated with having its shares trading on Unlisted.

* The board has promised it is reviewing its whole business, with "no aspect sacred".