In August 2007, Convertible Notes (CNs) to the
value of $40M were issued to fund the acquisition
of Paddington. Noteholders required a hedge
facility to provide them with comfort regarding
the Company's future cash flows and so Norton
sold forward 330,000 oz of gold at an average
A$875 oz; Lehman Brothers was the counterparty.
On 15 September 2008, Lehman Brothers Holdings
Incorporated filed for Chapter 11 bankruptcy protection
in the US. Norton's hedge counterparty,
Lehman Brothers Commercial Corporation (LBCC),
has also filed for Chapter 11.
Since 14 September 2008, LBCC has not traded with
Norton. Since LBCC went into default, Norton
had exercised its rights and made no hedge payments.
At 14 September 2008, a total of 247,694 oz remained
On19 July 2010, Norton entered into an agreement
to settle the LBCC hedge litigation. Details of
the hedge settlement can be found here click
The CNs are held by Lehman Brothers Commercial
Corporation Asia (LBCCA) ($28M) and two Norton
shareholders ($5M each). While LBCCA has entered
administration and this is not expected to affect
the operation of the CNs. Norton is in discussion
with all noteholders regarding a possible re-structuring
of the CNs.
Norton continues to meet its obligations with
respect to the Convertible Notes. The market will
be kept appropriately advised.