Wednesday, June 11, 1997
Trickle of cash
By GEOFFREY SCOTTON and MICHAEL PLATT
Calgary Sun
There's no gold, but there is a pot of cash at the end of the Bre-X rainbow -- about $36 million
worth.
That's the amount of cash bankruptcy monitor Price Waterhouse, in a report obtained by the Sun,
says Bre-X and its two affiliates -- Bro-X and Bresea -- still have on hand despite Bre-X's
spectacular stock meltdown over the Busang mining scam.
The Calgary-based company faces a raft of North American lawsuits in the affair and lawyers for
angry investors said yesterday they can't wait to get at the $35.7 million.
"You bet this is good news," said Clint Docken, a Calgary lawyer representing more than 200
investors.
"It's our clients' money and as far as I know they're the only ones Bre-X owes it to.
"This report helps to start filling in pieces of the Bre-X puzzle."
But with more than 219.2 million shares in Bre-X outstanding, what cash investors might recover
remains an open question.
Bre-X president David Walsh could not be reached for comment.
The monitor's first report, filed yesterday in Calgary Court of Queen's Bench, details the
companies' financial position as of the end of May.
It shows the three firms have total current assets of $43.2 million and liabilities of $4.8 million.
As well, other Indonesian ventures related to the Bre-X group have $1.1 million in cash but have
debts exceeding their assets.
However, the report does not tally the potential impact of pending lawsuits on the companies'
position.
Price Waterhouse was placed in charge of monitoring the assets and records of Bre-X when the
company filed for bankruptcy protection May 8, following the Busang nosedive back to its penny
stock roots.
Since the company crashed, it has scaled back its operations drastically.
All its Indonesian employees -- which numbered 550 in early May -- have been terminated.
Costs of operating the company's Calgary and Jakarta offices, as well as other Indonesian
ventures, are pegged at $322,000 per month.
The document also reveals that Bre-X paid $700,000 US to company lawyers prior to the
appointment of Price Waterhouse to defend potential suits against the seven current and former
directors of the companies.
More than $1.2 million has been spent for investigators probing the collapse of the company's
stock.
Bre-X had been the darling of the mining world, going from a tiny firm run out of owner Walsh's
Calgary basement to a multimillion-dollar giant, thanks to its alleged Busang gold find in Indonesia.
The find was thought to be at least 70 million ounces -- making it the gold discovery of the
century.
But the gold fever broke May 3 when an independent audit showed there was no mineable gold at
the site and someone had tampered with the samples.
At its height, Bre-X was valued at $6.2 billion.
The stock no longer trades.
The Mounties are now investigating the affair as are the Indonesian government and securities
officials in the U.S.
Bre-X faces 11 lawsuits in Canada on behalf of angry investors along with eight class-action
lawsuits in the U.S. and three in Canada.
Investors contacted yesterday were pessimistic they'd see any money.
"It (the lawsuit) is a long shot," said Jack Kindermann, an investor from St. Paul in northern
Alberta -- a town that became famous for numerous paper Bre-X millionaires.
But fellow St. Paul investor Paul Pelletier, who didn't lose money, said: "Anybody getting into this
should have their eyes open ... It's a big boys game."
He wasn't surprised Bre-X had cash: "Why would they be broke?
"It wasn't their money to lose."
-- with files from Kelly Harris
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