The fatal shooting of Christopher Tiensch, the former chief executive of Plus SMS, has turned attention on the demise of the former NZX listed company.
Tiensch was shot in Port Aransas, Texas on September 11. Plus SMS' story began on March 8, 2005 when RetailX, a struggling NZX Alternative Market (NZAX) company, announced it would acquire Plus SMS for $12.565 million. The consideration was 240 million new RetailX shares at 5c each, 30 million options exercisable at 10 cents and $565,000 cash.
RetailX's share price at the time of the announcement was only 8c and its total market value just $248,560.
Brett Wilkinson, who owned 19.3 per cent of RetailX, appeared to be one of the driving forces behind the RetailX/SMS deal.
Wilkinson, who has played a role in a number of backdoor listings, wrote a popular sharemarket tipster column for a Sunday newspaper in the mid-1980s.
He was employed by Direct Broking but now operates his own company, Wilkinson & White.
He has been involved in a number of NZX listed companies as a director or significant shareholder. These include:
* Being a former director and shareholder of RLV No 3, which is now called Orion Minerals after a failed attempt to backdoor list the real estate group The Joneses. Orion recently announced it was now looking "to undertake private equity investment in projects and companies with Chinese market potential."
* He was a director and shareholder of Holly Springs, which is now RIS Group. RIS was suspended by the NZX this week for not providing its June year results.
* He was a director and remains a shareholder of OPI New Zealand, which is in liquidation. OPI was originally listed as Vistron but changed its name to MFS New Zealand after acquiring the New Zealand assets of the Australian group. MFS subsequently changed its name to OPI.
Wilkinson is now standing for election to the Claridge Capital board at next month's annual meeting. This follows the acquisition of a 9 per cent Claridge stake by John Sorensen who has been involved in a number of listed NZX companies with Wilkinson.
Claridge was first listed as Regal Salmon and has had numerous changes of direction and names including Queen Charlotte Holdings, Aquaria 21, AQL Holdings, Certified Organics, CER Group and now Claridge Capital.
Ken Wikeley was the managing director of Aquaria 21 in the mid-1990s. Wikeley and Sorensen, who worked together at Rainbow Corporation during the 1980s, have been involved in a number of listed companies together in the past two decades, including Plus SMS with Wilkinson.
Wilkinson and Sorensen want to remove Roger Gower and former SkyCity chief executive Evan Davies from the board and change the company's direction. Gower and Davies are strongly opposed to Wilkinson and Sorensen, mainly because of their previous record with listed companies.
Wilkinson and Sorensen companies usually have a short-term share price appreciation to be followed by a share price collapse.
Plus SMS was no exception to this trend.
The company started making positive announcements shortly after it changed its name from RetailX to Plus SMS. Additional shares were placed with investors well below the market price, a large number of options were exercised at 10c and there was widespread selling by insiders.
Plus SMS's share price peaked on November 14, 2005 at 82c. This gave the company a total market value of $262 million even though it was generating no revenue.
American Christopher Tiensch was appointed chief executive in June 2006 and was granted a substantial number of new shares for nil consideration. His employment contract also entitled him to additional free shares, subject to performance.
However, the Plus SMS charade came to an end on September 1, 2006 when the company announced the resignation of two directors and admitted that a number of its stock exchange announcements had been incorrect and too optimistic.
Chairman Jim Bracknell, whose name appeared at the bottom of many of the optimistic statements, was one of the resignations. Bracknell was also a director of Holly Springs and MFS New Zealand, two other Wilkinson associated companies. He had also been a director of Mark Byers' Blue Chip.
Tiensch resigned two years later and Plus SMS was delisted in April 2010 after repeated infringements of the Listing Rules, its failure to comply with the terms of a determination of the NZ Markets Disciplinary Tribunal and an inability to meet its financial obligations to NZX.
The company has subsequently changed its name to PLS Corporation, has 1300 shareholders and describes its principal activity as the "provision of mobile entertainment and network services".
Plus SMS was one of the worst cases of share-price hyping on the NZX since the mid-1980s. Nevertheless the Securities Commission took no action after it decided there was "no evidence of an intention on the part of Plus SMS directors to deceive or mislead the market".
Meanwhile, the dispute between the company and Tiensch continued to escalate.
In mid-2008 Tiensch owned 23.4 million Plus SMS shares, representing 5.6 per cent of the company, and shareholders were asked at that year's annual meeting to approve the issue of a further 13.5 million shares to the CEO.
However, the motion was withdrawn and Tiensch's employment contract was terminated shortly afterwards. He never received the additional 13.5 million shares.
Plus SMS's March 2010 year annual report revealed that Tiensch had brought a claim in the United States for unfair dismissal against the company and certain directors. The claim was successful and the arbitrators awarded Tiensch $530,565.
However, the award was held in trust until a counterclaim by Plus SMS was heard. This was due to begin shortly after Tiensch was shot while on a fishing trip from Austin, Texas.
The Plus SMS/Tiensch dispute was bitter, with the former chief executive arguing that the directors forced him to make optimistic announcements to the NZX in order to "pump and dump" the stock (inflate the share price so that insiders could sell).
The company argued that Tiensch had blackmailed directors for more money and accused him of fraud.
There is no evidence that Tiensch's death is connected with the Plus SMS court case. However, the Plus SMS saga is a terrible reflection of our poor regulation and the unwillingness of regulators to fully pursue clear signs of persistent market manipulation.
* Disclosure of interests: Brian Gaynor is an Executive Director of Milford Asset Management.