Investor Presentation October 2020
Wivenhoe and Westgem
OMNI
BRIDGEWAY
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The decision was handed down in November 2019 in favour of our funded clients,
and which found the defendants Seqwater, Sunwater and the State of
Queensland (State) liable in negligence to group members. Subsequently the
State has advised that it will not appeal the decision, whereas the other
defendants have now filed a notice of intention to appeal.
Allocation of proportions of liability between the defendants has been
determined Seqwater 50%, Sunwater 30% and the State of Queensland (State)
20%. Sunwater and the State have decided not to appeal the apportionment of
liability, whereas Seqwater has appealed the allocation.
Mediation set for September 2020, failing which a hearing is scheduled for
October 2020, to resolve various issues including the methodology for
determining quantum of liability. The various appeals have been scheduled for
May 2021 if mediation does not result in a settlement.
Issues to resolve include:
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determination of quantum of damages suffered by group members;
appeals (assuming they proceed); and
the costs orders that should follow from the decision handed down in
November 2019.
We continue to estimate that Omni Bridgeway's income may range between
$120m and $150m, based on a conservative view of a range of possible resolution
outcomes. There is the potential for total damages to significantly exceed that
conservative range and that would increase Omni Bridgeway's return.
• We are not proposing to revise Omni Bridgeway's income estimate at this stage.
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The Supreme Court of Western Australia has delivered judgment in the Westgem
litigation in favour of the defendant and has dismissed the claims of Omni
Bridgeway's funded clients.
The Westgem investment has a carrying value of $55m and was commenced in
2011. This represents 8.7% of Omni Bridgeway's consolidated litigation
investment assets of $628m at 30 June 2020 and 7.2% of Omni Bridgeway's
consolidated net assets of $767m.
The carrying value is broken down as follows:
External Costs
Capitalised
Internal Costs
Capitalised
Borrowing Costs
Total Carrying Value
$34m
$9m
$12m
$55m
Following a detailed review of the judgment and assessment of appeal prospects
a decision will be taken with regard to what level of impairment may be
necessary, if any, against this carrying value. Any impairment will be a non-cash
item. As part of this assessment, Omni Bridgeway will also determine what level
of provision for adverse costs may be necessary. Current estimate of cash
impact from adverse costs is between $7.5m and $10m.
The estimated portfolio value (EPV) of the Westgem investment is $250m, out of a
total EPV of balance sheet investments at 30 June 2020 of $1.11b and a
consolidated EPV of all funded investments of $13.5b. As part of the judgment
review and consideration of the prospects for appeal, Omni Bridgeway will
reassess the EPV of the Westgem investment.
INVESTOR PRESENTATION | OCTOBER 2020
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