25 Oct 2016

Wynyard Group in voluntary administration

12:17 pm on 25 October 2016

Software company Wynyard Group has been put in voluntary administration.

KordaMentha partners Neale Jackson and Grant Graham have been appointed administrators of the company, which creates security software for use by companies and law enforcement agencies.

Computer keyboard

Computer keyboard Photo: 123RF

It's been a difficult year for Wynyard, with its board warning in August that the company's future was in question and signalling uncertainty underlying its assumptions about cash-flow and future sales.

The New Zealand firm reported a loss of $36.2 million for the six months ended June, and has struggled to deliver on forecasts of earnings and revenue, while it has burned through its cash in developing products and markets.

The company had been looking at how it could meet the conditions to draw on a $10 million loan, which included significant draw down and administration fees and a hefty 15 percent interest rate.

In a statement to the NZ Stock Exchange, the company's board said the move to voluntary administration was a significant decision but the right one.

"The board considered all available options including potentially raising additional capital and drawing on the $10 million loan but concluded that neither raising further equity nor incurring debt was in the best interests of the company, its shareholders or other stakeholders," the statement said.

Voluntary administration is a step short of receivership and allows the company to be "ring fenced" and given a breathing space to work out future options.

The company's shares were suspended from trading last week. They had plunged 88 percent this year hitting a low of 17 cents before settling at 21.5 cents.

A group of disaffected shareholders had started looking at a class action against Wynyard's directors for losses.

Gregory Marshall, spokesperson for the shareholders considering legal action, said the writing was on the wall a while ago.

"From any moment on from last Christmas onwards, it was very clear the business was going to fail." he said.

Mr Marshall said the class action was complex but would continue and said the group may claim about $200 million.