Quintis chairman Dalton Gooding and former managing director Frank Wilson are current and former members respectively of the board of Santalis, the pharmaceutical arm at the centre of a disclosure breakdown within Quintis.
Shares in the sandalwood grower have been suspended from trade for more than one month as the company
pursues a recapitalisation to solve its liquidity problems at a critical time of year for new plantation sales.
Quintis' problems were magnified when it admitted in May that its current board and management
were unaware a prestigious deal with Nestle's Galderma was terminated in December 2016. In fact, it has since emerged that the US-based Santalis knew around November 30 that its agreement with Galderma was concluding, signed off on it December 16, and this took effect January 1, 2017.
This information was not conveyed to Quintis, which as recently as March told shareholders it was three years into a 20-year supply agreement with Galderma.
Based on statements by Quintis, it is apparent that the "communication breakdown" – as Mr Gooding has previously described it – occurred at the management level of Santalis.
Quintis has reiterated in responses to the ASX that no current board member or senior manager, including Mr Gooding, was aware of Galderma's exit until May. This is despite the company not having shipped any of its sustainably grown pharmaceutical grade Indian sandalwood oil to Galderma since June 2015, a procedure for regular communication between Santalis and Quintis, and the Santalis chief executive attending Quintis board meetings in Perth in June 2016 and February 2017.
This also appears to be the case despite Mr Gooding and Mr Wilson serving or having served on the board of Santalis itself.
Mr Wilson, who remains
the largest shareholder of the company formerly known as TFS, declined to comment, and a spokesman for Quintis referred to the company's ASX statements.
Santalis was viewed internally and by some market participants as a potential spin-off in 2017-18, worth $US300 million ($397 million) to $US500 million in its own estimation based on companies at the same stage of development.
It is also understood that Mr Wilson was not a signatory to the termination agreement between Santalis and Galderma that was formalised in December last year.
San Antonio, Texas-based Santalis holds quarterly board meetings; Quintis chief executive Julius Matthys is now a member of the board as a function of him being the head of Quintis. The Quintis chairman and senior management of Santalis represent the rest of the board.
Santalis investigates clinical uses for sandalwood oil, overseeing clinical trials and patent applications.
Quintis' market value has shrunk to $115 million and
speculation has turned to what the underlying assets would be worth in a recovery scenario if it fails to meet its
next interest payment to bondholders on August 1.
Separately, Totus Capital revealed its successful short position in Quintis has endured almost three years. "The skill in making money from these opportunities is not necessarily in identifying them," the fund manager said in its monthly update on Wednesday, but "having the tenacity and patience to follow them closely in order to scale the position up sufficiently to make a meaningful return once the broader market finally becomes concerned".
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