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In August 2007, Convertible Notes (CNs) to the value of $40M were issued to fund the acquisition of Paddington.  Noteholders required a hedge facility to provide them with comfort regarding the Company's future cash flows and so Norton sold forward 330,000 oz of gold at an average A$875 oz; Lehman Brothers was the counterparty.

On 15 September 2008, Lehman Brothers Holdings Incorporated filed for Chapter 11 bankruptcy protection in the US.  Norton's hedge counterparty, Lehman Brothers Commercial Corporation (LBCC), has also filed for Chapter 11.

Since 14 September 2008, LBCC has not traded with Norton.  Since LBCC went into default, Norton had exercised its rights and made no hedge payments.  At 14 September a total of 247,694 oz remained sold forward.

On19 July 2010, Norton entered into an agreement to settle the LBCC hedge litigation. Details of the hedge settlement can be found here click here

The CNs are held by Lehman Brothers Commercial Corporation Asia (LBCCA) ($28M) and two Norton shareholders ($5M each). While LBCCA has entered administration and this is not expected to affect the operation of the CNs. Norton is in discussion with all noteholders regarding a possible re-structuring of the CNs.

Norton continues to meet its obligations with respect to the Convertible Notes. The market will be kept appropriately advised.