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Court battle could cost NZX $10m

NZ NewswireNZ Newswire 19/05/2016

The court stoush between the New Zealand stock market operator NZX and an Australian company over buying a grain exchange could cost it up to $10 million.

NZX and Ralec have made claim and counterclaim over NZX's purchase of the Australian Clear Grain Exchange in 2009 and the case is now being heard in the High Court at Wellington.

Speaking to shareholders at the NZX annual meeting in Auckland on Friday, chief executive Tim Bennett said the total legal cost would amount to between $9m and $10m by the end of the trial, not including the time spent by internal staff in running the litigation.

NZX spent $2m on the litigation in the 2015 financial year.

"Needless to say, it would have been in both parties' interests to settle this commercial dispute before the trial," he said in speech notes published on the NZX.

The dispute is into its third week of what was meant to be a nine-week hearing but that's since been extended after a slow start to proceedings.

NZX claims the former owners of the grain exchange misled it with inaccurate forecasts while the vendors' counterclaim is that the stock exchange underfunded the investment meaning it would never hit targets to trigger earnout payments.

NZX's agribusiness has also been hit by the downturn in New Zealand and Australia's primary sectors, and Mr Bennett said he expects the stock market operator will have less exposure to that unit in the future as its market business and funds services develop.

Chairman James Miller also reiterated NZX's guidance for earnings before interest, tax, depreciation and amortisation to be between $22.5m and $26.5m in 2016, depending on the number of initial public offerings, secondary capital raisings, trading volumes, and the final outcome of the grain exchange dispute.

NZX shares were unchanged at $1.01 and have declined 5.6 per cent this year.

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