Kiwi high-rollers take UK tech hit

Brian Henry. File photo / Paul Estcourt

A British technology firm partly bankrolled by high-profile New Zealand businesspeople - including Theresa Gattung, Gareth Morgan and jailed Ponzi scheme operator David Ross - has suffered a massive share price plunge after crucial fundraising talks stalled following the loss of its largest customer, raising questions about the company's financial viability.

London-listed Arria NLG provides artificial intelligence software that sifts through data to generate reports that would usually by written business analysts.

The company was founded by New Zealander Brian Henry - the founder of NZX-listed Diligent Board Member Services - and his brother Gerald.

Fairfax has reported that Arria secured US$20 million from New Zealand investors in 2012 through a funding round organised by Wellington investment banker Andrew McDouall.

In 2013 Arria's shareholders included economist Gareth Morgan, former Telecom boss Theresa Gattung, ACC portfolio manager Blair Tallot, Spark chairman Mark Verbiest and disgraced fund manager David Ross, according to the report.

Ross, who ran New Zealand's biggest Ponzi scheme, was sentenced to 10 years' and 10 months' jail in 2013.

In a market announcement yesterday, Arria said its contract with Shell Exploration & Production Company had been terminated.

Arria said there had been a "material uncertainty on the continuing financial viability of the company pending a successful agreement for additional funding".

"The company was until yesterday in advanced discussions with a number of institutional and other investors for a substantial equity fundraising at a share price significantly below the current market price, which it was targeting to conclude within a matter of days," the firm said.

"This fundraising was predicated on revenue expectations which included the continuation of the Shell contract and, therefore, the company has suspended these discussions."

Arria said the loss of the Shell contract created a significant shortage of funding and further capital would be required "in the near-term" if the company was to continue as a going concern.

The company intended to re-engage with potential investors, the statement said.

The company said that while Shell was a major client, revenues were beginning to be generated from other customers.

The Business Herald understands the company has recently secured clients including agricultural data firm FarmLink, an airline turbine manufacturer and two large investment banks.

Arria said it was possible that Shell might resume use of its technology.

The company listed on AIM, the London Stock Exchange's international market for growth companies, in December 2013.

Its shares swiftly rocketed to a high of 282.5p after the float, before slumping to 73.5p by March 2014.

The stock fell more than 72 per cent to close at 8.5p, giving Arria a market capitalisation of less than 9 million pounds, following yesterday's announcement about the Shell contract.

Arria, which had been tipped to list on the NZX, posted a loss of 12.4 million pounds from revenue of 816,000 pounds in the year to September 30, 2014.

Brian Henry last year admitted to manipulation involving orders and trades in Diligent shares and was ordered to pay a $130,000 penalty after settling with the Financial Markets Authority.

Gerald Henry was jailed in the United States for mail and wire fraud in the 1990s.

The brothers were associated with Energycorp, which failed spectacularly beneath a mountain of debt in the late 1980s.