JOHANNESBURG (miningweekly.com) – Minerals explorer Randgold & Exploration (R&E) and its former auditor PwC have concluded a settlement agreement in respect of a legal dispute arising from PwC's alleged failure to audit R&E properly, resulting in losses claimed by R&E, which are disputed by the auditing firm.
On August 3, 2008, R&E instituted sixteen civil action claims against PwC in the High Court of South Africa, claiming “billions of rands” worth of damages from PwC in respect of the financial period 2000 to 2003.
PwC defended the action, denying any wrongdoing on its part and that it was liable to R&E in the amount claimed, or at all.
The matter was last year referred to an arbitration process.
Without any admission of liability or making any concessions on the part of either R&E or PWC, and “purely with a view to avoiding costly litigation and for commercial reasons”, the parties had since decided to settle the claim, in terms of which PwC would make payment to R&E of R150-million.
The implementation of the settlement agreement remained subject to the condition that R&E procured written irrevocable undertakings from shareholders holding at least 51% of the company to vote in favour of the resolution.
R&E said in a statement on Wednesday that the claim against PwC was “robust” and that good progress had been made in preparing for the arbitration, but noted that the matter was “complex” and it was estimated that the arbitration process would endure for a lengthy period.
“The PwC offer of R150-million, or R2.10/share, represents 80% of the group’s [net asset value] and 99% of its weighted average share price, which makes the offer significant.
“The board has consistently approached the company’s recovery process on a commercial basis and has concluded that the settlement offer by PwC is economically attractive and should be proposed to shareholders,” R&E stated