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Pyne Gould turns to annual loss on Wilaci payment, expects $17M from Complectus

Wednesday 30th August 2017

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Pyne Gould Corp, the financial services firm controlled by managing director George Kerr, turned to an annual loss due to the 20.54 million British pounds cost of its Supreme Court-ordered payout to Wilaci Pty. 

The NZX-listed, Guernsey, UK-based company posted a loss of 17.12 million pounds in the year ended June 30, from a 6.46 million pound profit in 2016, due to recognising the "abnormal expense" of the payment to Wilaci, which the Supreme Court confirmed in July when it denied leave to appeal an earlier ruling by the Court of Appeal. 

The 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 they 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 to Wilaci.

"PGC and subsidiaries continue to be involved in a number of large and complex litigations over the course of the financial year," the company said in its commentary. "This is an unwelcome, but necessary, requirement of defending the balance sheet of PGC. We continue to devote considerable resources to this part of the business. We will only comment on individual proceedings as outcomes occur."

The company still hasn't received what it's owed from the sale of Perpetual Trust to Complectus in 2014, which it now says is $17.7 million, after the sale of Complectus to an Australian buyer fell through in June. It had threatened to sue Bath Street Capital, which owns Complectus, but both sides backed down in September 2016.  The transaction attracted the attention of the Financial Markets Authority after Pyne Gould recognised the $22 million gain in its 2014 annual earnings on the sale of Perpetual, despite the payment not being triggered.

The reduction in value of that payment reflects the extension of the timeframe it will take to get it, and the directors "consider the receivable remains recoverable, however, time will be required to achieve this outcome," the company said. 

Pyne Gould's operating revenue rose 703 percent in the year to 11.7 million pounds, bolstered by it receiving 10.6 million pounds from dividends compared to 96,000 pounds the year before. It had net current assets worth 50.04 million pounds at the end of the financial year, from net current liabilities of 3.73 million pounds a year earlier.

The shares last traded at 24 cents, and are up 17 percent this year.


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