By Denise McNabb
Sydney-based Northern Crest Investments, formerly Blue Chip Financial Solutions, is planning a comeback in New Zealand to sell licences for its intellectual property.
It signalled its intention in its 2010 annual report filed at the Australian Stock Exchange (ASX) this month ahead of the company’s annual meeting in Sydney on August 12 and plans to relist before the end of the year.
Northern Crest has been suspended from trading since February 2008 after failing to pay listing fees.
Blue Chip collapsed in New Zealand in 2008 owing creditors and investor upwards of NZ$80m.
No time-frame was given in the annual report for the company’s return to New Zealand other than to say it would be in the future. There are no details either about what intellectual property would be sold or how it would be used.
But last year Northern Crest director Laurie Eakin described the company as one “that assists developers in pursuing efficient exit strategies, including the underwriting of developments and arranging exit solutions through third party distribution partners.”
This is similar to the “intellectual property” former Blue Chip boss Mark Bryers touted before Blue Chip went to the wall, but without underwriting risks.
Notably Bryers is listed in the annual report as receiving NZ$113,237 in consultant fees.
In the previous year Northern Crest paid him NZ$190,000 in director fees until he resigned from the board on 25 May 2009.
In the last year he has been bankrupted in New Zealand over NZ$235m of debts, has been banned from managing or directing a company for five years, and has admitted 34 charges laid by the Ministry of Economic Development in relation to the running of Blue Chip resulting in a fine of NZ$37,500 and 75 hours community service and is presently under investigation by the Serious Fraud Office.
Northern Crest earned all of its NZ$4.4m revenue in the last year to March 31 from the sale of licence fees for its intellectual property in Australia. It reported a net profit after tax of NZ$3.7m (NZ$15.2m in the previous year) but this included a profit on discontinued operations of NZ$2.9m (NZ$17.4m in 2009).
The company said it would no longer consolidate companies in liquidation or those that were subsidiaries of companies over which it had no control (Blue Chip companies) after taking legal advice.
It said it had also co-signed a deed of release with Lombard Finance & Investments on a guarantee it had made on a loan so it had excluded from the consolidated accounts NZ$9.1m in underwriter receivables and vendor loans and liabilities totalling NZ$12.4m owed by these subsidiaries to Lombard.
The loan had evolved as part of the group’s sale of its New Zealand operations to MIDE (a group of related companies under the control of former Northern Crest senior management). Northern Crest had permitted several subsidiaries to guarantee the performance of MIDE to enable it to obtain finance from Lombard.
Northern Crest said while it had been released from the guarantee, the loan facility had not been settled with Lombard’s receivers. Lombard was placed in receivership in April 2008.
Unpaid rent to Bob Jones
The annual report also noted at March 31 it still had owed Robt Jones Investments unpaid office rent of NZ$450,000 and that the NZ Inland Revenue Department had refused to reverse an undisclosed provisional tax payment and that it may appeal this.
Northern Crest intended raising money through a NZ$5.2m rights issue to repay an interest-free loan of NZ$3.68m made to the company by Australian-based Manifest Capital Management.
Curiously, the annual report made no mention of earlier plans Northern Crest announced to the ASX in April to throw a financial lifeline to some Blue Chip investors - understood to be those who poured NZ$20m collectively into the company but found their money was never secured over property.
Northern Crest chairman Marc Wilson had said in March he would announce details by the middle of this year.
Sydney auditors Hall Chadwick tagged the accounts with fundamental uncertainty about its future as a going concern because of a raft of outstanding issues, including the company being named as a defendant in a NZ$285,000 suit in New Zealand.
Both the ASX and the Australian Securities and Investment Commission (ASIC) have confirmed they are investigating the affairs of the company after the collapse of Blue Chip.
Calls to Northern Crest were not answered.
* Denise McNabb is a freelance financial journalist based in Sydney who has written for The Independent and Fairfax Media in New Zealand and Australia.