KEY POINTS:
About $18 million plus interest, or two- thirds of the money paid out by Tranz Rail insiders in a settlement with the Securities Commission last year will likely be distributed to former shareholders next month, the commission says.
The commission secured a total of about $27.7 million in settlements from a group of Tranz Rail insiders who sold the company's shares for between $3.60 and $4.28 in early 2002. The shares were worth 30c a year later.
Former Tranz Rail director and merchant banker David Richwhite and his company Midavia Rail Investments, part owned by his business partner Sir Michael Fay, settled with the commission in June last year by yielding $20 million, without admitting liability.
That added to the $7.7 million in settlements the commission had gained from other insiders including former Tranz Rail chief executive Michael Beard; former chief financial officer Mark Bloomer; former Tranz Rail director Carl Ferenbach and American investment fund Berkshire Fund III.
An initial distribution by the commission will be made only to those investors who bought Tranz Rail shares from the insiders and the group is understood to consist largely of institutional investors.
After reconstructing relevant share trading records, the commission had written to all affected former shareholders detailing what it believed their entitlements were and giving them a period of time to notify the High Court if they wanted to be heard on the matter or had any objections, said commission general counsel Liam Mason.
Counterparties who don't agree with the payout have until the end of this week to file a notice of opposition.
"There will be another conference on March 20, by then we'll know if any one is going to oppose.
"If not we'd expect orders to be made pretty soon thereafter." Payments would likely be made within a month.
However, if there is opposition to the plan, a High Court hearing will be necessary to consider relevant issues, delaying the distribution.
Aside from the commission's costs in pursuing the matter, it is still undecided what will be done with the balance of the settlement, which has been held in an interest bearing trust account by Toll Holdings.
Options under the Securities Markets Act include payments to others who were Tranz Rail shareholders at the time of the relevant transactions, the company itself, the Securities Commission and even charities.
The six insiders sold a combined 19 per cent of Tranz Rail for about $83 million in 2002 and the commission spent 18 months investigating whether they had done so knowing of unpublicised financial problems at the company.
