Enzed U.S.A, expects ‘substantial loss’

Press, 2 December 1987, Page 42

Enzed U.S.A, expects ‘substantial loss’

Enzed Technology U.S.A., Ltd, a subsidiary of the New Zealand second board listing, Enzed Technology International (in receivership), is likely to show a substantial loss for the year ended June 30, said a director of Enzed U.S.A., Mr C. O’Loughlin.

In a statement released yesterday, he said the company had encountered severe trading and financial difficulties in the last 18 months. The New Zealand Stock Exchange yesterday extended the date for the company to report its final result from October 31 to November 30.

Mr O’Loughlin said the audited figures of Enzed U.S.A. were still not available in New Zealand.

“However, the company’s auditors, Messrs Coopers and Lybrand, are nearing completion of their audit in Los Angeles and the final report and accounts should be available by Friday, December 11.”

An insufficient capital base, the high level of fixed costs associated with business in the United States, the failure of initial attempts to franchise the Enzed concept, and slower than expected market penetration are reasons given by Mr O’Loughlin for Enzed U.S.A.’s difficulties. “The situation was compounded in August when the New Zealand Enzed Group, which owns 50 per cent of the company, was placed in receivership,” he said.

"Funding assistance from New Zealand ceased and the New Zealand

receivership brought matters to a head as far as the company’s bankers were concerned." Under the direction of the chief executive, Mr C. Baxter, Enzed U.S.A. took immediate steps to stabilise the situation, A firm of advisers was retained to negotiate with the company’s bankers and as a result of these measures Enzed U.S.A. was now approaching a break even position, Mr O’Loughlin said. The company’s bankers had conditionally agreed to restructure its debts to

enable it to continue trading. A long term funding package would be available, once negotiations for a settlement with creditors and certain other matters were satisfied. Mr O’Loughlin said negotiations were also at an advanced stage with the receiver of Enzed International for a company to acquire the 50% in Enzed U.S.A. which Enzed International holds. The intending purchaser has already been involved in Enzed U.S.A.’s negotiations with its bankers.