By Francis Chan

INVESTORS in Lehman Minibonds who still hold the credit-linked notes should get some of their money back in 'a few months', according to PricewaterhouseCoopers Singapore (PwC), the receivers of the toxic investments.

The announcement yesterday will bring some cheer to investors who were unable to come to settlements with distributors that sold the products.

It also allays fears that the process, to recover some of the hundreds of millions of dollars lost, would be bogged down in lengthy cross-border legal wrangles.

PwC said the receivers have taken control of the underlying collateral of the notes and have started the process of realising the residual values before paying noteholders.

The collateral consists mainly of corporate bonds held by two special purpose vehicles in the Cayman Islands.

The receivers reached an agreement recently with Lehman Brothers Special Financing (LBSF), the swap counterparty in the Minibonds programme here.

This deal cleared the way for the next step, which involves the receivers appointing a disposal agent - believed to be a global investment bank - within the next few days.

The agent will begin liquidating the underlying collateral so certain payment obligations, including some due to LBSF, can be made.

The balance of the funds will be distributed to noteholders. The amounts they receive will depend on what series or tranches of notes they held.

PwC said it will 'take a few months to liquidate the collateral and determine the actual value which can be realised'.

Although PwC could not say when noteholders might get some money back - or how much might be available - due to confidentiality obligations, the news of an impending payout indicates that a costly and long-drawn cross-border legal battle will now be avoided.

'This settlement provides certainty to the noteholders that at least some of their initial investment will be recovered,' said Mr Dominic Nixon, a partner at PwC and one of three appointed receivers from the audit firm.

The Straits Times understands that the deal with LBSF involved the receivers negotiating with eight law firms from four different jurisdictions around the world.

This was required given the complex legal structure of the notes, which were governed by jurisdictions in Britain, the United States, the Cayman Islands and Singapore.

The entire Minibonds programme, from series 1 to 3 and 5 to 10, went into default after Lehman Brothers filed for bankruptcy protection in New York on Sept 15 last year.

Official reports indicate that the total issue size of the programme was said to be over $500 million, of which about $375 million was sold to some 8,000 retail investors here through the nine distributors.

HSBC Institutional Trust Services Singapore, the trustee of the notes, said it will keep registered noteholders - which include financial institutions that sold the notes and later bought them back from investors through closed-door settlements - informed of progress, starting from today.

The Monetary Authority of Singapore (MAS) said the deal with LBSF does not affect any claims individual investors are making against the financial institutions that sold them the notes.

MAS said: 'Investors who accepted partial settlement offers ... would have retained a portion of the notes, and will get to keep the residual value arising from those notes.'

This article was first published in The Straits Times.