[miningmx.com] – RANDGOLD & Exploration (R&E) is hoping to close another chapter on its decade-long recovery of funds misappropriated by the late Brett Kebble when it puts a R150m settlement with auditor, PwC, to shareholders.
R&E launched a civil action against PwC in 2008 alleging that the auditing firm had failed to spot misappropriations of shares in R&E by Kebble. The action consisted of 16 claims against PwC amounting to billions of rands.
However, after nearly six years of litigation which had cost R&E R38m in legal fees, it decided to agree to a R150m settlement with PwC following arbitration. The former gold producer said today the agreement made commercial sense.
“The PwC offer of R150m (R2.10/share) represents 80% of the group’s NAV [net asset value] and 99% of its weighted average share price which makes the offer significant,” it said in a statement.
It added that continued ligitation would be lengthy, involve further financial resources, and not guarantee a positive response for shareholders. A general meeting will be convened with R&E shareholders to vote on the matter, it said. A circular is first due.
In terms of the settlement agreement, PwC would be obliged to make payment of the R150m within 30 days of signing. The agreement would also include VAT.
Since re-listing on 4 June 2010, R&E has spent most of its time hoovering up its various legal claims dating from the Kebble era including a R950m settlement with JCI, a ‘sister’ company that Kebble used to house gains from encumbering shares in Randgold Resources, a UK-listed gold producer that has no relationship with R&E.
More recently, R&E has pursued a settlement from Paul Main who had wrongfully converted two million Randgold Resources shares. Main made a final payment of R23m in June last year to R&E.
According to a Business Day article in March, R&E had about R210m in cash, therefore, its staying power for a prolonged legal bout is questionable.
R&E also has to move on to claims against Gold Fields, an action involving Western Areas that Gold Fields bought from Kebble. This legal action had been stayed whilst the PwC matter was in arbitration.
