$6M deficit for Blair firm

Press, 12 October 1988, Page 35

$6M deficit for Blair firm

A $lOOO debt owed by shareholders is the only asset of a company with liabilities of more than $6 million, a creditors meeting was told yesterday.

The debt is the unpaid capital of Christchurchbased Gas Mining Company, Ltd, a shelf company set up to buy 19.6 per cent of Prime West Corporation (in receivership). The S6M liability is to Whistling Dixie, Ltd, a subsidiary of Primacq Holdings (formerly Rainbow Corporation). Gas Mining is controlled by Prime West’s chairman, Mr Neil Blair, and Mr Pat Baldwin — an executive of Maughold Enterprises (in receivership). Neither attended the meeting. In September, 1986, Gas Mining entered a contract to buy 56 million Prime West shares from Whistling Dixie for $8.96 million. The purchase was to be in four stages. An initial $lOO,OOO payment was to be followed by a first instalment of $1.4 million in October, 1986, for 5 million Prime West shares (30c each). This was to be followed by a payment of $4.06 million in June this year for 20M shares (20c each)

and a final settlement of $3.5M in August for the remaining 31M shares. The creditors meeting heard yesterday that Gas Mining secured a loan from the Bank of New Zealand for SI.SM, to cover the initial payment and first instalment. The security for the loan was 5M Prime West shares and a personal guarantee from Neil Blair.

Although Gas Mining met the initial payment in September, it did not pay the first instalment until late November — three weeks after the sharemarket crash. The deputy official assignee, Mr John Rollinson, said the crash contributed to Gas Mining’s failure. “With the drop in the value of Prime West shares which the company had contracted to buy from Whistling Dixie, it was not possible to either resell or borrow to complete the purchase,” he said. When the second instalment was defaulted on, Whistling Dixie petitioned successfully for the winding up of Gas Mining. It was the only creditor to file, claiming a total of $5,906,849. It retains the Prime West shares, which are now virtually worthless. The BNZ was not represented at yesterday’s meeting, but its debt is estimated at $l.B million, including interest and service fees. That debt is

increasing by $877 a day. Mr Rollinson was asked if Neil Blair was in any position to meet his personal guarantee to the BNZ. “I have no idea at all of Mr Blair’s personal position,” he replied. Gas Mining was represented at the meeting by one of the principals of its solicitors, Mr John Fox, of White, Fox and Jones. He said the outstanding share capital would be paid. The meeting agreed that the official assignee should continue with the liquidation of Gas Mining, and no investigation into its affairs should be conducted. This is in contrast to June last year when Primacq’s chairman, Mr Tony Agar, said action against Gas Mining’s directors was most likely. Mr Agar said then that his information was that Gas Mining had no assets “If this is the case, we have to wonder why the directors entered into a multi-million dollar deal,” he had said.