Former Independent Directors of Mainzeal Group Ltd Comment
Former Independent directors of Mainzeal Group Ltd comment
Today the Bank of New Zealand appointed receivers to Mainzeal Property and Construction Ltd (MP&CL) and Mainzeal Living Ltd (MLL).
Mainzeal Group Ltd was not put into receivership.
However the independent Chair of MGL, Dame Jenny Shipley confirmed that, as of midday February 5th 2013, 4 directors resigned as members of the board of Mainzeal Group Limited. We did so because we did not have sufficient confidence in our ability to continue to perform our duties as independent directors, as the undertakings given and the basis on which we had undertaken serve as Directors had changed and so we had no option but to tender our resignations.”
At this time these Director were not directors of Mainzeal Property and Construction Ltd. The three directors resigned the board of Mainzeal Property and Construction Ltd – the company in receivership - in December 2012, at the shareholder’s request. At that time MP&CL was meeting its obligations as they fell due and had facilities with its bankers that enabled it to continue to operate. We agreed to accept the role of Directors of Mainzeal Group Ltd based on the undertakings and assurances given by the shareholder at that time. Sadly these have now changed which have led to our resignations.
That company had passed through a very difficult year in the construction sector, the impact of Legacy issues around leaky buildings, a large contract with disputed payments and a Chinese supply chain scheduling and delivery challenge.
The 4 Directors resigned the Mainzeal Group board on Tuesday when it became apparent financial undertakings from its shareholder, Richina Pacific, for Mainzeal Property and Construction were no longer in place and the further equity commitments were uncertain or conditional.
As a result the working capital facility with the BNZ was withdrawn and despite intensive negotiations between the shareholder, the parent company Richina Pacific, the directors of MGL on behalf of MP&C and the bank, a solution was not possible and the BNZ has appointed receivers.
All former directors say, “As independent directors of MGL, the holding company, we have done everything we could to try and avoid this painful outcome. We are fully aware and very saddened by the subsequent impacts the receivership may have on Mainzeal employees, creditors, subcontractors and others.”
“It is deeply disappointing that we were unable to secure the support that would have allowed Mainzeal to continue to operate,” say the directors. “Mainzeal Property and Construction was a very good company, had a significant workload of building in Christchurch and if we had managed to gain the undertakings necessary, it was working toward a positive cash flow and profitability in 2013.”
Peter Gomm has also resigned the boards of Mainzeal Group ltd and Mainzeal Property and Construction but will remain as CEO.