The third week of an 11-week hearing came to a close early today with former NZX head of strategy Heather Kirkham saying Clear had been trading slowly during the due diligence process.
NZX looked at a tougher earnout hurdle for the sellers of the Clear Grain Exchange which would have got the platform beyond the breakeven target eventually agreed on, the High Court in Wellington heard today.
The third week of an 11-week hearing came to a close early today with former NZX head of strategy Heather Kirkham saying Clear had been trading slowly during the due diligence process, but sellers Dominic Pym and Grant Thomas were enthusiastic about the 1.5 million tonne target and discussed whether the earnout target should be increased to 2 million tonnes "to ensure it provided a true performance objective" as Clear was only at about break even if it achieved 1.5 million tonnes. While this didn't happen, she said the deal structure was re-jigged so there was less money up front and more money conditional on earning volumes.
The dispute is over NZX's purchase of the exchange in 2009, with the stock market operator suing Thomas, Pym, and their companies Ralec Commodities and Ralec Interactive for misleading it with "wildly inaccurate" forecasts. Ralec subsequently filed a counterclaim against NZX, later adding former chief executive Mark Weldon to the list of defendants for underfunding the exchange to meet the earnout targets.
Kirkham told the court she remembered Thomas and Pym communicating that they had a strong positive relationship with Graincorp, Australia's largest bulk grain handler, and she specifically recalled Pym saying Graincorp would actively market Clear to its growers, with the implication that Clear wouldn't need as much sales resource.
Thomas and Pym never mentioned the monthly cost of just under $300,000 would need to increase and had it been discussed there would be a written record, she said.
Before court adjourned for the weekend, Kirkham began to explain her relationship with Pym before he left NZX in 2011.
NZX's development team had been getting too many last-minute requests for fixes, and Kirkham had become the filter to make sure only high-priority issues would go to the team and non-urgent fixes could be left for Monday morning meetings. In November that year, Pym began sending her frequent emails which she became frustrated with, she said.
"My impression was that Pym wanted to highlight all the day-to-day issues and to try to make the case more resource was needed," Kirkham said. "The priority decisions were made at a high level, and we were still looking for evidence they were trying to work to these priorities." Kirkham said she expressed this frustration to Weldon in an email, but this was not read out in court.
Pym and Thomas are due to give evidence in June, after NZX's witnesses have finished.
Earlier in the day Weldon ended more than four days on the witness stand, with Ralec's counsel, Tim North QC, quizzing him on an email to NZX's legal team and the former CEO's note-taking.
Weldon played down an instruction to NZX's legal team that Clear data reaching a must-buy level - seen at 15 percent to 20 percent of the grain market - be at the forefront of communication, saying it "had been discussed with the board over a number of years and was at the heart of the IMI (information, markets and infrastructure) system."
The email came after Thomas contacted Weldon having left the company, and Weldon said "this was the start of a series of communications from an ex-employee of whom we were quite wary."
"He resigned, it's relatively sensible to forward communication from an ex-employee."
Weldon's note-keeping in the period from May 2009 to July 2011 when NZX first made a claim against Ralec was also called into question by North. Weldon said he took notebooks into meetings to make notes and had left those notebooks at NZX when he left, but could not say what had happened to them.
"When I left, one of the things I found out was a bunch of expenses I'd given my PA had gone missing," Weldon said. "Filing wasn't [his personal assistant's] strong point - where they ended up I'm not sure. You seem pretty obsessed with them."
(BusinessDesk)
