Hi Corrupt, I think you'll find find there was analysis around for the last few years suggesting that SGW were in deep sh*t. I remember being contacted by a journalist from Minesite in the UK, asking if I had heard anything about SGW being insolvent. He had some research from an aussie analyst suggesting such a scenario. Looks like that guy was right, however he may have been a couple of years ahead of the pack. However, here is a story from last week's Minesite. Sum's why the we dont always get to hear the full story, when lawyers get involved its much easier to avoid the stock than get caught up in costly legal battles. Cheers John.
August 31, 2004
Few Tears Shed In London As Sons Of Gwalia Gets Its Comeuppance.
The Curse of Gnome is clearly alive and well. Back in February 2002 Minesite carried an article entitled, “Sons of Gwalia And Its Off Balance Sheet Items Brings A Whiff Of Enron To Australia.” The Lalor twins, who were running the company at the time, leapt for their lawyer and tried to sue Minesite for daring to expose what a number of Aussie analysts and commentators were saying about the dangers of Sons of Gwalia’s hedging positions. Threats had kept them from going public as they knew just how litigious the Lalors could be.
Unfortunately Minesite got the brunt of their anger and it cost the company dear at a time when its finances were not strong enough to withstand a battering from lawyers’ fees. That was when the Curse of Gnome was borrowed from the UK satirical magazine Private Eye and called down on SoG. Never again was the company’s name mentioned on Minesite until now. But now the company is in voluntary administration and it is relevant to the work being carried out by the administrators to point to the criticisms made two and a half years ago. Maybe if, instead of saying we were wrong and demanding a retraction, the directors had concentrated on sorting out the hedging positions , it would never have come to this.
The callers to Minesite in the early weeks of 2002 wanted to draw attention to the massive deficiency in shareholders funds built up by Sons of Gwalia over the previous couple of years which, according to them, had been disguised by deferring foreign exchange hedging contract deliveries. The allegation was that if the banks, as counterparties to these hedges, had insisted on delivery into all of them as they matured, Sons of Gwalia would have been lucky to escape intact.
A similar argument was put forward about the gold hedging programme. At the time anyone trawling through the notes to the most recent accounts would have discovered that there were further unrealised losses on hedging of A$910 million which were referred to as ‘off balance sheet items’. Mark-to-market losses were what it was all about.
SGW Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
