Henry Walker Eltin's administrators release update to ASX

The administrators of Henry Walker Eltin, McGrathNicol+Partners, have provided shareholders with an update.

Background
The first notice dealt with issues relevant to our appointment:

• An overview of key business operations;
• Those activities the Administrators focused on during the initial stages of the appointment;
• The immediate asset realisation initiatives;
• The longer term objectives of the Administration;
• The work the Administrators intended to undertake in relation to an assessment of HWE's financial position;
• Preparation for the second meetings of creditors.

Creditors meetings and reporting
After obtaining Court approval to extend the convening period for three months, the
second meetings of creditors were held on 8 July 2005. At the meeting, creditors voted
in favour of a resolution to adjourn the meeting for a period of up to 60 days or, subject
to Court approval a period of up to 120 days.
On 15 August 2005, Justice Hely of the Federal Court then ordered an extension of
the adjournment period for the second creditors meeting up to 120 days. Accordingly,
the second creditors meetings are being reconvened on 3 November 2005.
Further orders have been obtained from the Federal Court allowing creditors of the
various entities involved in the HWE Mining business to vote for a further extension of
the adjournment period for up to sixty days. These orders were obtained to align the
Voluntary Administration and HWE Mining sale timelines, to enable execution of a sale
agreement during the Administration period.
In June 2005 a comprehensive report was provided to creditors which set out the
estimated returns to creditors, and the results of our investigations. A Supplementary
HWE05C-ShareholderCircular-O2607-GRC.doc 2
Report to creditors was issued on 20 October 2005, updating the estimated return,
taking into account further asset realisations and a better understanding of its creditor
claims.
In those reports, we have recommended creditors vote for a Deed of Company
Arrangement, the proposed terms of which are outlined in the reports. Both the First
and Supplementary Reports are available on the McN+ website at
www.mcgrathnicol.com.au.
Asset realisations to date
To date the Administrators have, interalia, realised the following assets:

• The Simon Engineering business;
• The Indonesian mining operation interests;
• Civil Engineering operations in the Northern Territory and elements of the Western Australian operations; and,
• The Bridge Autos motor dealership.

There are other assets where we are close to securing sale arrangements. In general,
we are most satisfied with the results of the asset realisation program to date.
HWE Mining
The contract mining business is the most significant of HWE's businesses. Operations
are primarily based in Western Australia, with substantial operations in New Zealand
and Jamaica.
The sale process for the mining business is well advanced. An Information
Memorandum was issued to interested parties, indicative offers received and shortlisted
bidders selected. Preferred bidders have commenced final due diligence which
includes full contract disclosure and will facilitate negotiations with certain of HWE's
customers.
We hope to complete a sale in the next 6 to 8 weeks.
No return to shareholders
Based on anticipated realisations, it appears certain that there will be no return to
shareholders. As such, we shortly intend to make an Administrator's Declaration under
section 104-145(1) of the Income Tax Assessment Act 1997, but will withhold the
Declaration until the conclusion of the HWE Mining business sale process.
Shareholders claiming as creditors
Shareholders may be aware of a recent decision in the Federal Court in relation to the
Sons of Gwalia Limited Administration. This decision permitted a shareholder to lodge
and have admitted a proof of debt for voting purposes at a meeting of creditors, not
withstanding his claim related to his acquisition of shares. This decision has been
appealed.
HWE05C-ShareholderCircular-O2607-GRC.doc 3
There is currently no clear framework for assessing shareholders claims as creditors.
Any shareholders who consider they may have a provable claim in the administration
of the HWE group will need to obtain their own legal advice. However, a sufficient
level of detail in relation to any claim would need to be provided by any shareholder
seeking to prove as a creditor to allow the Administrator to consider the claim for
voting purposes, or to adjudicate on the claim once the Voluntary Administration ends
and formal proofs of debt are adjudicated upon.
Conclusion
The immediate priorities for the Administration are:

• Reconvening the adjourned second meeting of creditors meeting and seeking approval of the proposed DOCA's for certain entities;
• Completing the sale of the HWE Mining Assets and progressing to a DOCA for those entities;
• Adjudication of creditors claims and, in time, payment of dividend distributions to creditors; and,
• Making of the Administrator's Declaration to shareholders for tax purposes.

Shareholders should contact Computershare Investor Services Pty Limited
on 1300 855 080 if they have any queries in relation to the above, or with queries
relating to shareholdings.
Yours faithfully
J D Hayes
Joint Administrator
S B Kershaw
Joint Administrator