Unsecured creditors of Peregrine Fixed Income (PFI), the largest operating arm of the failed Peregrine group, will receive 12.5 HK cents in the dollar in what liquidators PricewaterhouseCoopers (PWC) described as a better than expected first interim payout. The HK$1 billion initial payment - the first since the investment bank collapsed with liabilities of US$4.5 billion in January last year - is slightly higher than the liquidators' forecast of at least 10 HKcents in a letter sent to creditors in March. However, despite the higher payout, PWC is sticking to its estimate of between 20 cents and 40 cents in the dollar for the likely total return. It expects to pay a second interim dividend in the first half of next year. 'At HK$1 billion, I think the total amount of the interim dividend to be paid next week is the largest in Hong Kong's corporate history,' PWC's partner in charge of the PFI liquidation, Simon Copley, said yesterday. In terms of total percentage returns, however, Peregrine will not match that from the last major local liquidation, Bank of Credit and Commerce International Hong Kong, where creditors received full payment plus interest. News of the higher than expected interim payout comes as the debate over the fees charged by PWC in the Peregrine case continues following criticism by Mrs Justice Doreen Le Pichon. One creditor, whose reaction to the interim payout was that 'some money is better than nothing at this stage', said he believed fees charged by PWC were 'reasonable compared with other liquidations'. 'This one is more transparent than other liquidations,' he said. 'We have been provided with adequate information.' PWC has so far recovered PFI assets worth more than US$400 million out of a total estimated debt due of about US$2 billion. It expects to make total recoveries of between US$475 million and US$775 million. Mr Copley said the vast majority of the funds realised so far had come from so-called 'good-book' debtors - mainly US and European investment bank counterparties to derivative contracts. However, there had also been an unexpected payment from Indonesian debtors, he said, helped by a gradually improving currency and economy in Indonesia. No money had yet been recovered from Steady Safe, the Indonesian taxi firm to which Peregrine had a US$265 million exposure. However, talks on a debt restructuring are proceeding and PWC is still hopeful of eventually receive some payment. Some 163 ordinary unsecured creditors are due to receive payments next week while agreed preferential creditors are being paid in full. By far the biggest cheque - HK$888 million - among the unsecured batch will go to parent company Peregrine Investments Holdings, which is expected to make an interim payout of as little as three cents. Some 94 of 110 former employees with claims will also receive payments. A further HK$850 million has been set aside by the liquidators to cover payments to 80 creditors with claims subject to International Swap Dealers Association master agreements. However, their payments are being delayed subject to clarification of legal issues by the British courts. These issues revolve around whether the credit quality of a non-defaulting counterparty to a derivative contract should determine the settlement amount. Mr Copley said he expected the next PFI dividend 'will exhaust what we can get from people who are able to pay'. That means hopes for future payouts would rely on recoveries from debtors in Indonesia, where PFI's exposure was US$1.1 billion, and Thailand, where exposure was US$300 million. Earlier this year the Government appointed an investigator to look into the Peregrine collapse. The inquiry is still at an early stage.