The collapse of diversified engineering firm Hastie is calamitous on so many levels.
Thousands of employees could potentially be left without jobs. Suppliers and customers will be left in the lurch. Projects may need to be postponed, delayed or cancelled.
And a group of very wealthy investors have been left scratching their heads.
The two most prominent Hastie shareholders were investment firm Lazard – backed by veteran investor John Wylie – and Thorney Investments, the vehicle owned by the Pratt family and run by star investor Alex Waislitz.
While both groups are well versed in the vagaries of the market, losing out on this investment will sting, mainly because Lazard and Thorney were not long-suffering shareholders who had no choice but to hang onto their stakes in the hope things would turn around.
Lazard only became Hastie’s cornerstone investor in June last year, after the struggling group slashed its debt by $145 million and raised $160 million in an equity raising.
Thorney emerged as an investor a month later, grabbing a 9.6% stake as part of the capital raising and investing around $18 million at a share price of $1.40 (adjusted for a one-for-10 stock split that occurred in November last year).
On July 27, the day Thorney lodged its initial substantial shareholder notice, Hastie’s share price touched $1.65.
It was to be the highest price the Thorney team would see.
The bad news out of Hastie never really stopped. Profit downgrades, breaches of loan covenants, huge writedowns and, finally, a $20 million accounting scandal that apparently went undetected for the best part of three years.
Class action lawyers have been circling Hastie for months and there have been suggestions that big investors like Thorney and Lazard could be lining up legal claims of their own.
That’s possible, but whether a wing of the Pratt family will be willing to go through this process and punt on recouping some of its losses is doubtful.
Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.
