The trust that owns Marlborough's electricity network and a large, indebted wine business will face up to its beneficiaries on Monday, fresh from revealing it will not be paying a dividend.
At the start of December, Marlborough Electric Power Trust (MEPT), which in each of the past two years has paid every electricity account in the region a $200 distribution, confirmed the performance of its investments meant it would not be making a payment this year.
The trust owns Marlborough Lines as well as Yealands Wine Group, an indebted wine business which it paid more than $100 million buying since 2015.
Marlborough Lines annual report revealed the lines company had loaned Yealands $15m in late 2019. Days later, Yealands announced it had sold a large chunk of its vineyard asset to the New Zealand Super Fund for $34m.
Yealands said the proceeds from the sale would be used both to repay debt and as part of a premiumisation strategy. However, MEPT chairman Ian Martella's report said trustees felt Yealands' debt levels were "high" and "not in proportion to the level of earnings it achieves".
In previous years, the trust and Marlborough Lines have talked up the performance of Yealands, but Martella indicated the investment was under scrutiny.
"We have been kept informed of the issues and continue to seek advice and to monitor the situation."
Since announcing the result, David Dew, chairman of Marlborough Lines, has announced he is stepping down in March, one year after he was re-elected by the trustees to the board. Peter Radich, the former chair of the Broadcasting Standards Authority, resigned as chairman of Yealands in June.
Trustees will gather for the MEPT's annual meeting in Blenheim on Monday, where residents will be able to question them on their governance of the business.
David Taylor, a local businessman who has launched civil proceedings against the trustees alleging they had not kept beneficiaries of the trust informed about its performance, said Martella's report was "too little, too late in terms of apparently having some concern about the debt".
Taylor said he was concerned about reports that there seemed to be no immediate prospect of Yealands repaying its loan to Marlborough Lines.
In September, the trust went to court to prevent Taylor from distributing details from its meeting minutes which it failed to properly redact.
Local MP Stuart Smith, of National, said the suspension of payouts was a hit for the region's residents.
"Some constituents have contacted me and said that they rely on that dividend in the run-up to Christmas, and it's not going to be there. So it's not good from their perspective," Smith told the Herald.
When the deal was announced in 2015, Smith, a former chairman of New Zealand Winegrowers, questioned whether Marlborough Lines, a utility company, had the necessary skills to run a large export-focused wine business.
He was interested to hear whether the performance of Marlborough Lines and Yealands justified a dividend in 2019.
"It may well be that it shouldn't have been paid last year."
Clarification: An earlier version of this story suggested Marlborough Lines chairman David Dew had already resigned from the company.