Fliway reverses $250,000 provision after settlement meets threshold for indemnity cover
Fliway cited the claim from a former customer in its March prospectus.
Fliway Group [NZX: FLI], the freight and logistics business which listed in April, has reversed a $250,000 provision after settling a claim with a former customer, thanks to a deed of indemnity with shareholders who took the company public.
Fliway cited the claim from a former customer in its March prospectus. The client said they were overcharged by Fliway for warehouse storage services between July 2008 and August 2012, and claimed $778,872 plus $206,943 interest, or about $986,000 in total.
The terms of the settlement were confidential but the costs associated with the claim and settlement exceeded the $250,000 threshold for Fliway's deed of indemnity with its selling shareholders.
The shareholders entered into a deed of indemnity in favour of Fliway on March 5. The indemnity protected Fliway against any loss of earnings as a result of the claim. However, Fliway could not make a claim under the indemnity unless the amount exceeded $250,000.
Fliway's chief financial officer Jim Sybertsma said that the claim has been settled. "If the claim had come to $245,000, Fliway would have had to pay the whole thing" Sybertsma said.
Fliway had made a $250,000 provision at the end of financial year 2015 to allow for a potential claim. That provision will now be reversed, it said.
(BusinessDesk)
Sophie Boot
Tue, 03 Nov 2015
Tue, 03 Nov 2015
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Fliway reverses $250,000 provision after settlement meets threshold for indemnity cover
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