Monday 11th December 2017
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Pyne Gould Corp has reached a confidential deal with Australia's Wilaci over late payment fees, which it says will be smaller than the 20.5 million British pound cost of its Supreme Court-ordered payout.
NZX-listed, Guernsey, UK-based Pyne Gould posted a loss of 17.1 million pounds in the year ended June 30, from a profit of 6.5 million pounds in 2016, due to recognising the "abnormal expense" of the payment to Australian businessman John Gill's Wilaci, which the Supreme Court confirmed in July when it denied leave to appeal an earlier ruling by the Court of Appeal.
Managing director George Kerr today said the deal "is for less than the amount provisioned in PGC's 2017 annual report, which will have a positive impact on PGC shareholder equity."
"It is not yet possible to quantify the overall impact due to Torchlight Fund LP also incurring ongoing litigation expenses in respect of the Cayman litigation," the company said. "The impact will be reflected in Pyne Gould Corporation's next half year report." The settlement will be expensed via Torchlight Fund LP, which is consolidated by Pyne Gould, it said.
The Cayman litigation refers to attempts by some Torchlight Fund LP limited partners to have the fund wound up via legal action in the Cayman Islands, which has been going on since 2015. Hearings for a petition for an order to wind up the fund began in February 2017, while a date has yet to be set for proceedings brought by Pyne Gould's local subsidiary which alleged that the petition "was being brought as part of an unlawful means conspiracy", in its latest annual report.
The company signalled in that report the litigation was a material uncertainty which may cast significant doubt on Torchlight Fund LP's ability to continue as a going concern and said it could have a significant impact on the realisation value of assets in the group's financial statements.
The Wilaci litigation concerned Torchlight Fund 1, an associate of Pyne Gould which was placed into receivership in 2014. Wilaci lent Torchlight the funds in August 2012 and were due in October that year. Wilaci didn't immediately call on the loan but managed the repayment in tranches between October 2013 and May 2014. In late May of that year, Wilaci issued a demand for payment of A$33.6 million, which included a $5 million facility fee, A$320,000 of interest and late payment fees which by then totalled A$28.3 million. Payment was not made and TLF1 was placed in receivership in 2014.
In October 2015, the High Court ruled that a late payment fee claimed by Wilaci was a “penalty fee” and was unenforceable, a ruling which the Court of Appeal overturned this year, ordering TLF1 to pay A$31.5 million in late payment fees.
Pyne Gould's shares last traded at 23.5 cents, and are up 15 percent this year.
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