Sons of Gwalia shareholders will finally get some financial compensation on their ill-fated investment, three years after the gold miner fell into administration.
Sons of Gwalia shareholders will finally get some financial compensation on their ill-fated investment, three years after the gold miner fell into administration.
Creditors, many of them shareholders, with claims of $50,000 or less will get a return of 20 cents in the dollar, following a decision last week to sell the assets to Denver-based Resource Capital Funds in a deal worth $205 million.
The sale of the company’s tantalum and lithium assets comes more than two years after creditors agreed to sell its gold division to St Barbara Mines for $38 million.
RCF was and remains a substantial shareholder of St Barbara, after it took a 23 per cent stake in the business several years ago, spearheading a boardroom reshuffle that left former executive chairman Stephen Miller out in the cold.
More than 5,000 Sons of Gwalia shareholders played an integral role in the company’s final asset sale following a High Court ruling earlier this year that ranked shareholder claims equally with debts owed to creditors, which effectively turned the shareholders into creditors.
The majority of those shareholders-turned-creditors chose to overlook a late rush on the company’s assets by a consortium back by former New York mayor Rudy Giuliani’s law firm, Bracewell & Giuliani.
The Bracewell proposal had the support of a small group of large creditors but RCF’s proposal had numerical support, with 88.4 per cent of votes cast in favour of RCF’s cash offer.
The RCF bid provides creditors owed more than $50,000 a return of 12 cents for every dollar owed, while smaller creditors will get 20 cents for every dollar owed.
Bracewell’s offer had the potential for higher returns but it was highly conditional.
If creditors voted against RCF’s bid there were no guarantees that Bracewell would formalise its offer.
But because the vote was split – creditors owed the most amount of money backed Bracewell, so voted against RCF’s offer, while the majority of creditors were in favour of RCF’s bid – the casting vote was decided by Garry Trevor, partner at administrator Ferrier Hodgson.
Ferrier Hodgson said the decision to back RCF provided creditors with “the greatest degree of certainty”.
James McClements, the Perth-based co-founder of Resource Capital Funds, said his company still had a long road ahead in turning around the fortunes of the assets – the Green Bushes mines south of Perth and the Wodgina mine near Port Headland.
“The business has been in administration for three years,” Mr McClements told WA Business News.
“This is about getting back to the basics and providing management with the resources they need.”
The creditors meeting went down to the wire, with lawyer Bruce Dennis, who acted on behalf of 630 shareholder-creditors, taking instruction from one large shareholder after the meeting had started.
He said the majority of shareholders backed RCF because they wanted something “certain and the sooner the better”.
