Blackwell Global Holdings (BGI) will wind down its finance company operation and let its executives go after it could not raise enough capital to fund the growth of its loan book.
The NZX-listed investment company, which is 75 per cent owned by derivatives trading and investment company Blackwell Global Group, has announced a restructure.
Chairman Sean Joyce said the board was of the view that BGI was "unable to continue to operate as a meaningful finance company operation" due to its inability to raise sufficient debt funding or equity at this time.
"The board does not consider that it is likely that funding will be found to assist BGI with the funding of a finance company operation in the near or intermediate future."
Joyce said the directors had decided to wind down the existing finance company operation and to reduce costs to give the company time to explore other alternative business opportunities via a potential reverse takeover transaction.
"As a result of this, the board has resolved to disestablish the roles of chief executive and chief operating officer within the senior executive team."
Chief executive Mark Thornton will leave full-time employment with the company on February 13 and COO Steven Knight on February 10.
Unaudited financial results for the six months to September 30, 2020 show it made a loss of $341,749.
The company's loan book was $749,000 as of then made up of two separate loans. All loans were secured by first mortgages over residential properties.
Shares in BGI fell to 0.008c on the announcement and are down 32 per cent on the year.
The company ran afoul of the NZX in June last year after it incorrectly stated its net tangible asset figure as 0.15c when it should have been 0.0015c.
The error meant that Blackwell told shareholders it owned about $75.3 million in assets, compared to the roughly $750,000 assets it actually had.
Its shares rose from 1.7c to 9.1c which increased the company's market cap from $2m to $45.7m.
The gain came despite the company reporting a net loss of $693,000 after tax, and revenue of just $436,000.
Multiple directors and senior management sold shares during the rally which was very short-lived.