An investment trust set up for disabled services in Napier looks to have lost $110,000 on a disastrous investment in a gingko business and may have to sell a building from which services are provided.
The Disability Training Services building in Austin St is at risk as a result of an unsecured investment by the organisation's investment arm in Nature Green NZ.
Disability Training Services Investment Trust Board is the sole shareholder of the company, set up in 2003 to grow and sell gingko leaves, which are marketed as a herbal medication and are popular in China.
The company was the brainchild of Napier City Council economic development officer Ron Massey and the company's sole director, Napier real estate agent John Knight, both of whom are on the investment trust board.
The board leased the building to Disability Training Services, which supports and trains about 60 disabled people, and helps some of them find work.
The board looks to have lost $110,000 in a cash advance it made to Nature Green NZ. Mr Knight, who chairs the board, said a decision would be made in coming weeks as to what would happen to the building, valued at $570,000.
He said the loss would not directly affect Disability Training Services, which was looking to lease another property anyway, and the investment trust would continue to support the services.
Mr Knight said gingko growers were promised $8 a kilogram in January. Nature Green went into voluntary liquidation in July after a downturn in the export price led to a price offer growers refused to accept. "I was acting in the best interests of the growers. I always have," Mr Knight said.
Since 2005, about a million gingko trees have been planted by more than 30 growers in Hawke's Bay, Bay of Plenty, Waikato and the top of the South Island. Seedlings were sold to farmers, with Nature Green signing a contract to buy back the harvested leaf.
Nature Green owed three secured creditors about $700,000. Another 30 unsecured creditors, including growers and the trust board, were owed $983,000, based on the $8/kg price for dried leaf.
Kenneth Oliver was removed as liquidator at a creditors' meeting in Napier yesterday.
He said Nature Green's assets, including about 70 tonnes of leaf harvested this year, would fetch $630,000 if sold at a price of $3.65/kg that he had negotiated with a European buyer. Buyers rejected that price at their meeting.
"It was the best offer going," Mr Oliver said. "I feel for the growers, I really do, but the bottom just fell out of the market."
- © Fairfax NZ News
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