A dispute over the sale of state-owned mapmaker Terralink could end up in court a second time.
Ocilla Investments, an unsuccessful bidder for the assets of Terralink, which went into liquidation at the start of the year, is trying to gather other unsuccessful bidders together to mount a claim for damages against Terralink’s receivers, based on their lost opportunity to make a definitive bid. But receiver Gary Traveller says the bidding process was fully defined in writing before the exercise began, and Ocilla’s complaint of being damaged, deceived or misled is therefore groundless.
The damages plan follows the failure of an attempted injunction to stop the sale of Terralink in the Auckland High Court on Friday, May 25. Justice Priestly said in his reserved judgement on the injunction that a claim for damages was more appropriate in the situation than “seeking interim injunctive relief”.
Asked last week how the gathering of bidders was progressing, Ocilla head Roger Barry said “first I’ve got to find them”. He does not know the identity of the other successful bidders, and says he has no chance of getting the information from the receiver, at PricewaterhouseCoopers. “If I can’t track them down through my own efforts I’ll have to advertise.”
The injunction, brought by Ocilla and its affiliate, South African mapping company Geospace, alleged that Terralink’s procuring a $2.5m loan from government by way of a debenture last December was “deceptive and misleading” under the Fair Trading Act, in that Terralink was at the time insolvent.
Justice Priestly said, however, that there was no evidence that the certificate of solvency signed by Terralink directors to obtain the first tranche of the loan was false or fraudulent.
Eventual owners, Dunedin-based Animation Research and Auckland-based NZ Aerial Mapping advanced a bid confidentially to the receiver, outside the tendering process before other bidders were allowed to examine the company’s affairs.
“We could only make a non-binding bid,” says Barry. If Ocilla and Geospace and other bidders had been made aware that there was an unconditional bid on the table, they might have upped their offer, he says. “But it was a closed shop.”
Receiver Traveller denies this. “It was open to Ocilla at any time to put in their own unconditional bid,” he says.
“There was a clause in the contract they signed saying that we [the receivers] were entitled to enter negotiations with any other [prospective owner] outside the bidding process,” he says. “You can’t even say it was in the small print; it was actually in quite large print, on the contract, on the advertisements in the press and on the memorandum of information sent to the bidders.”
Barry says he has heard that least one of the unsuccessful bids was considerably higher than the sum paid by NZAM and ARL. Again, Traveller denies this. “Ocilla’s was certainly well below what the successful bidder put forward. There was only one other bid that was close to [the chosen one], and that contained conditions that would have been unacceptable to us and to the Crown.” He declines to say whether that bid was higher or lower than the successful one, or to discuss the purchase price.
Traveller says Justice Priestly’s raising the question of damages does not mean, in his reading, that the judge considered a claim for damages might succeed. “Anyone can apply for damages,” he says, “but Ocilla can’t credibly claim they have been damaged. They’re just an unsuccessful bidder trying to make mischief in the market.”