Sons of Gwalia creditors receive payment

IMF (Australia) Ltd said the first distribution of money owed to creditors from the failed miner Sons of Gwalia Ltd has started, as administrators accept an increase in the value of claims.

Shareholders in Sons of Gwalia, represented by IMF, are expected to have claims totalling about $260 million accepted by the administrators, an increase from the previously accepted amount of $223 million.

Payment of the first distribution has commenced with IMF expecting its clients to receive about $10 million.

A second distribution is expected to take place some time next year.

Meanwhile a third payment depends on the settlement or successful judgement in the litigation by Sons of Gwalia against its former directors and auditors.

IMF said about $8.7 million has been paid to date.

The full announcement is below:

UPDATE - SONS OF GWALIA LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT)

1. The Board of Directors of IMF (Australia) Limited provides the following updated information in relation to this matter.

2. Shareholders of Sons of Gwalia, represented by IMF, are expected to have claims totalling about $260 million accepted by the administrators of Sons of Gwalia (currently claims of $223 million have been accepted by the
administrators).

3. Payment of the first distribution has now commenced to creditors including the shareholder clients of IMF.

4. IMF expects its shareholder clients to receive approximately $10 million from this distribution (with approximately $8.7 million paid to date).

5. The fee to IMF from these payments is expected to be $3.2 million (with $2.7 million received to date).

6. IMF expects a second similar distribution to occur during the course of the 2009 financial year with a similar fee of $3.2 million payable to IMF.

7. The net legal fees paid by IMF in relation to this matter are approximately $225,000 as a result of the successful conclusion of most of the litigation and payment of most of the legal costs by Sons of Gwalia.

8. A third payment may be made to shareholder clients of IMF depending upon the settlement or successful judgement in the litigation by Sons of Gwalia against its former directors and auditors. It is not possible at this stage to give a sensible estimate of what that payment (if any) might be.

9. IMF has included the fee of $3.2 million referred to in point 5 above in its results for the year ended 30 June 2008. IMF expects its 2008 results to be in or around the middle of its forecast range (announced to the ASX on 28 April 2008).