Wayland Group Sees Second Auditor of the Year Resign

Wayland Group (CSE: WAYL) made an announcement last night related to securing a DIP financing under its current creditor protection. While significant, the real gem of the news release was that the firm had its second auditor of the year resign with no successor being appointed. Essentially, this means that if Wayland Group should ever resume trading again – which likelihood is low – it will be a much longer wait at a minimum from here for investors.

NVS Chartered Accountants is the second auditor to resign in the last year for Wayland, following MNP’s resignation in August. MNP had indicated at time of resignation that it was related to the former CEO Ben Ward and the audit of the company’s 2018 financial statements.

MNP has advised the Company that it is of the view that there is an unresolved issue (as defined in NI 51-102) relating to the conduct of the Company’s former CEO in respect of the audit of the Company’s 2018 annual financial statements and that, despite the Company’s cooperation in respect of the matter, MNP was unable to form an opinion as to whether that conduct could have a material impact on those financial statements before the date of the Resignation. MNP has therefore advised that it is of the view that there is a reportable event (as defined in NI 51-102). The Company’s board of directors discussed the issue with MNP and MNP was authorized to respond fully to enquiries by any successor auditor (as defined in NI 51-102) concerning the issue.

While it was not indicated why NVS resigned, and no reportable events were filed in connection with the resignation, it’s a bad sign for investors who had hoped to see the firm file financials in the near future, enabling Wayland to potentially resume trading. No successor auditor has been appointed.

On the bright side, Wayland Group announced last night that it had managed to acquire DIP financing, also known as debtor-in-possession financing. The financing comes from The House of Turlock Ltd, and consists of a DIP facility of up to $1.1 million until December 16, 2019. With an initial fee of $50,000, the loan comes with an annual interest rate of 13% and a priority security interest over all of Wayland’s property.

As a result of receiving the financing, Wayland is now working towards identifying and considering ptential restructuring transactions. The transaction is expected to involve either a sale or investment, and will require court approval upon signing.

Wayland Group remains halted due to not filing its financial statements for the last four quarters.

Information for this analysis was found via Sedar and Wayland Group. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.