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Gold/Mining/Energy : YBM Magnex Intl Sees Revenue Growth 30-35%/Yr In MagnetOp -- Ignore unavailable to you. Want to Upgrade?

To: Adrian du Plessis who wrote (293)	2/21/1999 1:11:00 PM
From: Adrian du Plessis	Read Replies (1) \| Respond to of 314

YBM auditors, lawyers collect $150,000 a week YBM auditors, lawyers collect $150,000 a week Sale possible by April By SANDRA RUBIN The Financial Post Saturday, February 20, 1999 Auditors and lawyers sifting through the rubble of YBM Magnex International Inc. are burning through more than $150,000 a week in the search for salvageable assets, according to a receiver's report filed with a Calgary court. But the industrial magnet manufacturer at the heart of one of the biggest scandals to hit the Toronto Stock Exchange should be sold off by April 5, according to a timetable submitted earlier this month by Ernst & Young, the court-appointed receiver. YBM said when it put itself into bankruptcy on Dec. 9 that it expects to be indicted in a U.S. organized-crime probe and does not expect its stock to trade again. The receiver's report provides the first glimpse at what's happened behind the scenes since the bombshell hit. It shows that as of Jan. 29, YBM has had little in the way of revenue but maintained a cash balance of $29-million. Professional expenses appear heavy. From Dec. 9 to Jan. 29, YBM paid out $1.23-million about $650,000 of that in fees to Ernst & Young, which is the receiver as well as the company's manager. Some weeks the auditing firm had a team of nine partners and senior managers working on the file, each charging from $350 to $620 an hour. Its fees for the week of Dec. 22 topped $104,000. In contrast, the trustee in Bre-X Minerals Ltd. claimed fees of $306,000 for the first two months of work, an average of $38,000 a week. One difference is Bre-X was not kept operational while its advisors looked for ways to maximize recovery for burned investors. Ernst & Young could not be reached for comment yesterday. Ernst & Young was not the only one sending in regular invoices. Bay Street law firm Stikeman Elliot billed $161,409; $117,298 went to the Toronto law firm of Voorheis & Co., which was advising YBM's institutional investors and is now a legal advisor to the trustee; and U.S. counsel Pepper Hamilton claimed $111,604 (US). The report also shows that stockholders who lost $635-million in YBM's collapse could end up footing the legal bill to defend the company's officers and directors against class-action lawsuits filed after the stock's collapse. The receiver is asking the court's direction,' saying it is not predisposed to pay as the conduct of some of these individuals has been called into issue in the existing class actions.' Harvey Strosberg, leading a Canadian class-action suit, said he is not necessarily opposed. 'As counsel for shareholders, you would always prefer the defendants were using their own money instead of corporate money,' he said. 'On the other hand, in some circumstances it's reasonable, so that's for the court to decide.' Mr. Strosberg also said he is not overly troubled by the various professional fees. 'I can't say fees are high unless I know what was done in a particular circumstance,' he said. 'In any event, if the court decided they're unreasonable, it ultimately won't authorize them.' Ernst & Young has been assessing the value of YBM's assets while continuing its discussions with U.S. authorities investigating the company as part of a federal money-laundering probe. Many of th'se assets appear to be in a precarious financial position. As first reported in the Financial Post in November, YBM's key Eastern European operations could be headed for liquidation with $28-million (US) in uncollectible accounts and no sales orders pending.' Things aren't much better at the British subsidiary, which is under court protection from its creditors, or at the U.S. operation, which may need 'essential funding support' of $5.5-million (US) just to stay afloat through the end of June.