Morrison responds to Michael West, page-34

There was an article about the hearing published in Lawyerly last night.

It is a terrible read for Shine. The judge apparently said “why should the clients and group members be exposed to possibly 27 per cent interest on a facility when you’re paying out dividends?”, and “[Shine] could have used those retained earnings to fund the disbursements at no cost.”

The $32.2m in interest was accrued in the same period Shine paid out $45m in dividends.

There are plenty of unsettling comments, including “You are incurring disbursements in the largest case in Shine’s history, which is going to put pressure on your ability to pay dividends, but your directors chose to pay dividends rather than using retained earnings to mean these people weren’t exposed to an interest rate of 27 per cent in relation to these disbursements…I just don’t get it”. And, “…a choice has been made not to pursue the most cost effective form of financing”. And “you’ve got to accomodate the interests of clients before you look after the interest of a shareholder in receiving a dividend”.

If I was a gambler, it sounds like the judge is hard against Shine. The July judgment on interest and the full year results are going to be very very turbulent times for SHJ.