Crunch time in Rinehart trust row
Gina Rinehart might have been missing in action at the Ten Network annual meeting on Wednesday, but she is believed to be at the pointy end of reaching a settlement with her two estranged children - or face the prospect of being cross-examined in the courts next year.
It comes as the Australian Taxation Office has applied to the court for access to the court file in a legal dispute with two of her four children and as she awaits an announcement due on Thursday night in relation to the financing of her $10 billion Roy Hill iron ore project.
Export credit agencies (ECAs) are government-owned finance bodies set up to support national exports and imports. The US Export Import Bank (Ex-Im Bank) is believed to be about to make a decision on a $US694 million ($777 million) financing package, according to BusinessDay mining writer Peter Ker.
A final decision will be made on Thursday night after a month-long congressional review. Ker reports, "there have also been unconfirmed reports out of Asia that the Korea Eximbank has approved $US1 billion worth of finance, with final decisions from similar agencies in Japan also expected to flow within days".
The Roy Hill project has an estimated total debt finance of $7 billion, with ECAs expected to contribute $4 billion or more, speculated to be from Korea Eximbank, the US Development Bank, Japan Bank for International Co-operation (JBIC), China Exim and US Ex-Im. Commercial banks have been approached, including ANZ and NAB, to finance the other $3 billion. The rest of the project is funded by equity.
Given the amount of contracts Roy Hill has been letting in the past year, the project has been burning through equity, putting pressure on Rinehart and her partners to complete the debt financing, which was expected to be finalised a year ago.
By the close of 2009, Rinehart had completed a $100 million feasibility study and exploration study on the Roy Hill iron ore tenement, which, based on a 2.3-billion-tonne resource, has the capacity to produce 55 million tonnes of iron ore a year.
For various reasons the project is way behind schedule for first production, which was originally set for 2013, then pushed out to 2014 and more lately to September 2015. Industry experts believe it is more likely to be 2016, assuming it can get financing.
Rinehart at various times has blamed the delay on the legal action with her children, launched in September 2011 when three of her four children - Hope Welker, John Hancock and Bianca Rinehart - took action to remove her as trustee of the $5 billion family trust, alleging gross misconduct in her role as trustee.
The trust was due to vest on September 6, 2011, when the youngest daughter Ginia turned 25. It is worth at least $5 billion, which would make each of the children billionaires in their own right. But they have had little access to their inheritance since Rinehart took over from her father as trustee when the children were minors.
The case will resume on February 14, unless a settlement is reached.
If she doesn't settle over the Christmas holidays, Rinehart faces the prospect of handing to the court any deals she might have done with Hope and Ginia. A draft of an agreement was provided to the NSW Supreme Court last week, given by Rinehart's personal bodyguard to Hope, which contained a $25 million loan to withdraw from legal action with a condition that they must agree to Rinehart or her chosen replacement as trustee. The judge noted he would have to discount either of Hope or Ginia's requests for a replacement trustee if he found they had signed agreements with their mother that they could not oppose her replacement nominations. If this is the case, it would mean Bianca would be the most likely replacement trustee.
Other interesting revelations include Ginia's payment of more than $800,000 out of the family trust, while John has not received any money, and the withdrawal of Hope from the legal action due to financial distress and a split with her husband, yet she can now afford independent representation in the proceedings.
If too few documents are produced as part of the subpoena, then Rinehart, Ginia and Hope are likely to be called to the stand and cross-examined.
Like any good soap opera, there will always be more twists.