Australian businessman John Grill to appeal Torchlight loan ruling

Wednesday 18th November 2015

Australian businessman John Grill's Wilaci investment unit will appeal a High Court ruling that it wasn't entitled to A$33.6 million of penalty fees on a short-term loan to Pyne Gould Corp subsidiary Torchlight Fund No 1 LP.

Guernsey based, NZX listed Pyne Gould said Wilaci is appealing the New Zealand High Court ruling, which it said "was correct and in accordance with long-established legal principles" and said the appeal was "without merit." The company said it won't comment further until the appeal is concluded.

Last month, Justice Matthew Muir ruled the Torchlight unit didn't have to pay a late penalty fee on a A$37 million loan from Wilaci, which "so significantly exceeds the loss likely to be caused by the breach that it qualifies as extravagant and therefore unenforceable," saying the A$2.17 million per month fee "was undoubtedly extravagant in relation to any such loss."

Wilaci loaned the funds to Torchlight on Aug. 22, 2012, to help the Pyne Gould entity through what managing director George Kerr described as "a very tight liquidity situation" when Bank of Scotland International was exiting Australasia and calling for repayment from its debtors, including Torchlight's Australian real estate investment, RCL Group. A high profile dispute with the Financial Markets Authority made it more difficult for Kerr to recapitalise Torchlight.

Grill's Wilaci financed its loan by borrowing the funds from Credit Suisse, pledging 3.5 million shares in ASX-listed engineering firm WorleyParsons as collateral.

The loan was due to be repaid by Oct. 26, a deadline Torchlight missed, although Wilaci didn't immediately call on the loan, rather it managed the repayment through seven tranches between October 2013 and May 2014.

Wilaci served its demand on Torchlight in May 2013, and appointed receivers in June that year.

Shortly before the August hearing, Torchlight admitted liability for a A$5 million fee plus interest, and the judge also ordered the Pyne Gould entity to pay $1.18 million in receivers' costs and disbursements, plus additional costs that had been incurred since July 31.

Pyne Gould later said those costs amounted to about $4 million and had been provided for in the company's accounts.

The shares, which have been suspended from trading, were last at 24.5 cents.

BusinessDesk.co.nz

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