IRG seeks $500,000 to fix breach

Former Dorchester Pacific chief Brent King is trying to raise $350,000 in new equity for his listed investment business after the company yesterday revealed it had breached banking covenants and needs $500,000 in new capital.

NZAX-listed Investment Research Group, formerly known as Viking Capital, was due to file its annual accounts on Friday. But it missed the deadline and yesterday said it was in talks with its bankers over a breach in its covenants in respect of shareholders funds and interest cover for the year ended March 31.

The company, which counts former finance minister Sir William Birch as a director, said it required $500,000 in additional capital to remedy the breach and was actively reviewing options.

King said the problem had arisen largely because of write-downs for the March year. He would not elaborate on the details but they are likely to be linked to the company's investments in failed biotechnology company ICP Bio and Dorchester Pacific.

ICP Bio went into receivership in May last year and Dorchester Finance announced it was going into a moratorium in June last year. In September, King told shareholders at IRG's annual meeting it had lost more than $14 million through investments in the two companies over the past two years.

Yesterday, King played down the risk to the business and said he was confident it would not go under.

"Absolutely no chance at all."

He said since the balance date the company had raised more capital and sold off assets and it was not in breach of covenants for this financial year.

In May, the company sold off its Auckland funds management business, the FUM Business, to The Business Bakery LP subsidiary Macrocarpa Holding for $500,000. In June, it brought another shareholder on board to inject $250,000 into the business. King said those decisions were part of early moves to mitigate the problem and he played down the challenge of finding $500,000 in the tight financial markets.

"It's not actually a lot of money. It's just the sort of thing I could do personally."

But King said he was prevented from coming up with the full amount himself because NZX listing rules stopped him increasing his stake in the company beyond 30 per cent.

He planned to put in 30 per cent of the money himself and was in the process of talking to other investors about raising the remaining $350,000. But he would not say who else would be putting their hands in their pockets to help the company. "I don't want to escalate the situation."

King expected the problem to be remedied quickly. The company said it was not expecting its bank to take any action. IRG's share price closed yesterday at 1c.

ACCOUNTS DUE
* Investment Research Group
* Auckland headquartered investment research and media company.
* 30 per cent directly and indirectly owned by Brent King.
* Directors include former Finance Minister Sir William Birch.