Mainzeal directors say assurances changed

22:52, Feb 07 2013
Jenny Shipley
MAINZEAL COLLAPSE: Former director Dame Jenny Shipley says the situation changed at the end of January.

The former independent directors of the failed Mainzeal Property and Construction say they were well aware of the company's financial position.

The three directors - Dame Jenny Shipley, former Brierley chief executive Paul Collins and Clive Tilby - released a statement saying that a statement on TVNZ's ONE News last night that the three independent directors did not know until the end of last year that Mainzeal needed capital is incorrect.

''We were well aware of the company's financial position at all times.''

They said the company had a three year business plan and banking arrangements to continue and equity support from the shareholder up until late January which would have seen the company return to profitability.

But at the end of January assurances the independent directors and the bank relied on changed.

''All directors, including the independent directors and the director and shareholder Richard Yan and the management, worked hard on the particular business challenges we faced through the middle and latter part of 2012 and with the support of our bankers had arrangements in place and equity support from our shareholder up until late January of this year.

''Furthermore we had a three year business plan, banking arrangements in place, negotiations were going on with the shareholder and commitments were being made by the shareholder regarding future support for the company which would see it return to a cash flow positive position and profitability in 2013.''

''Unexpectedly at the end of January this year the written undertakings and assurances that the company, the independent directors, and the bank had relied on, changed.

''This led to the bank withdrawing support and despite exhaustive efforts by many people, a binding commercial solution was not able to be achieved. At that point the independent directors felt they had no choice but to resign.

''Mr Yan put the company into receivership citing difficult trading conditions and the withdrawal of shareholder support from Richina Pacific as the explanation.''

"The independent directors remain deeply saddened that this has occurred and will assist in anyway required in the official process now underway.''

The independent directors have not given financial details on how big a capital injection was needed.

Industry sources suggest the company faced more than $30 million of leaky building claims, a disputed contract and had suffered from millions of  dollars of unplanned extra costs at the Vector Arena.