GetSwift shares back on deck after trading lockdown
Written on the 29 May 2019 by David Simmons
A clarification has seen GetSwift shares fall back down to earth by more than 10 per cent in afternoon trading.
Shares in GetSwift (ASX: GSW) are trading once more after the logistics group responded to ASX concerns over an undisclosed partnership with a Kuwaiti fast food company.
Trading was suspended for the embattled tech company yesterday following a 20 per cent rise in GSW shares prompted by the off-market announcement of a strategic partnership with The Kout Food Group.
The deal will see GetSwift's central delivery management platform deployed across Kout's portfolio of companies including brands like Pizza Hut, Taco Bell, Burger King and Kababji.
The press release detailing the partnership, which included commentary from CEO of GetSwift Bane Hunter (pictured right), was not disclosed to the ASX.
Specifics of the deal are spare, and the release from The Kout Food Group does not detail the value or length of the partnership.
In a response to the stock market, GetSwift company secretary Sophie Katzis says the brand recognition and market presence of Kout may explain recent trading following the release, but the "Company believes that it is not material at this stage".
The company also emphasised Kout is the Middle Eastern licensee/franchisee of certain brands owned by Yum! Brands, including Pizza Hut and Taco Bell, and it had already reported to the market in December 2017 about a multi-year partnership with Yum! Brands.
The ASX referenced that 2017 announcement whereby GetSwift claimed it expected more than 250,000,000 deliveries would benefit from its platform as a result of the Yum! Brands partnership, with initial deployments to commence in Middle East and the Asia-Pacific region.
GetSwift was then asked to explain how many deliveries it expected to receive from the Kout partnership, to which Katzis replied the company no longer believed transactions were a suitable representation of business activity for investors and would only be reporting on revenue.
"Notwithstanding the foregoing and having regard to the early stage of the relationship between the Company and Kout, it is undeterminable how many deliveries the Company expects to receive from strategic partnership with Kout Food Group," she said.
"However, while GetSwift is pleased to be working with a group the size of Kout and values the relationship, the Company believes that it is not material at this stage.
"In the circumstances, the Company considers that this response to ASX's query (to be provided to the market) is sufficient to put the Kout Press Release in context, so that there is no false market."
GetSwift is no stranger to controversy and is currently embroiled in a class action law suit and an ASIC civil proceedings court case.
Founded by ex-AFL star Joel Macdonald (pictured left), the company is expected to be involved in the civil trial for a long period of time. This is a result of ASIC calling 30 witnesses against GetSwift, compelling Federal Court judge Michael Lee to delay the trial until 2020 to allow the company to prepare for the bout.
The proceedings relate to a series of ASX announcements made by GetSwift between February and December 2017 concerning agreements with clients for the use of the company's software-as-a-service (SaaS) platform.
The watchdog is alleging the company made representations that were misleading, and that Hunter and Macdonald were either involved in the failure of GetSwift to meet its obligations and failed to discharge their directors' duties.
It has been alleged GetSwift breached its obligations to the market in announcing deals with The Fruitbox Company, the Commonwealth Bank and Fantastic Furniture, with those deals subsequently either cancelled or subject to ongoing review.
ASIC is seeking declarations from the court that the Corporations Act was contravened, penalties, and a ban over Macdonald and Hunter from managing a company for a period of time.
GetSwift says it irrefutably denies the allegations made by ASIC and will vigorously defend the proceedings.
The group was facing up to three separate class action law suits over allegations it has engaged in misleading and deceptive conduct relating to continuous disclosure breaches to the market, however only the class action from Phi Finney McDonald was given the green light to go ahead.
The company confirmed in February 2018 it received notice from ASIC that it was "under investigation" as the company revealed a blowout in losses of nearly 1,000 per cent.
In its half yearly update released to the market shortly after the ASIC investigation was announced, the company revealed its net loss after tax had blown out by 964 per cent to $5.5 million from $516,000 in the prior corresponding period.
Ahead of the ASIC investigation and the class action being lodged, GetSwift spent nearly a month in a trading halt as it worked through its disclosure issues with the ASX.
Business News Australia
Author: David Simmons