Paladin on its knees, Langer Heinrich going to China National Nuclear
Australian mining outfit, Paladin Energy is in the process to announce a solvency restructuring proposal, and a potential option in favour of China National Nuclear Company (CNNC) which could entitle Overseas Uranium Holdings Ltd to acquire Paladin´s interest in the Langer Heinrich mine.
China National Nuclear is a minority shareholder in the Langer Heinrich mine through the registered parent, Langer Heinrich Mauritius Holdings. A fortnight ago, China National Nuclear was quoted in the Australian press as indicating that it wants to exercise an option, through its investment arm, Overseas Uranium Holdings Ltd, to acquire the entire Langer Heinrich share capital.
Arbitration is now seeked to determine the mine’s fair value.
This valuation would be the first step in a process that may lead to exercising the potential Overseas Uranium Holdings Ltd option, if in fact the option validly exists.
“Overseas Uranium Holdings, our joint venture partner, has put at risk the interests of Paladin´s stakeholders, including approximately 26,000 small shareholders, approximately 1,000 employees, international financial institutions and sovereign-related entities,” Paladin Energy CEO Alexander Molyneux said this week.
The company has resolved to engage Overseas Uranium Holdings Ltd in arbitration to seek orders and declarations accordingly. Disputes have been defined under the Langer Heinrich Mauritius Holdings Shareholders Agreement.
Paladin said it will seek to extend existing standstill arrangements with creditors to afford time to pursue the arbitration proceedings and to ensure that the company has adequate funding. Currently, Paladin claims it has executed standstill agreements with bondholders representing 75% of the holders of 2017 Convertible Bonds and 87% of the holders of 2020 Convertible Bonds.
The Shareholders Agreement is however subject to the laws of Western Australia, and must be referred to arbitration before the Singapore International Arbitration Centre.
According to the Namibian Stock Exchange bulletin, in the event that the potential Overseas Uranium Holdings Ltd claim to an option, is proven to be valid, it is unlikely that Paladin can implement the solvency restructuring option. Paladin countered by stating that it has taken significant steps to move ahead the restructuring process to preserve value for all stakeholders.
The fair value determination process depends on Overseas Uranium Holdings Ltd establishing that an `event of default´ has occurred under the Langer Heinrich Mauritius Shareholders Agreement. “The Company disputes that an `event of default´ has occurred and so disputes the validity of the notice received from Overseas Uranium Holdings Ltd” Paladin said in a statement released this week on the Namibian Stock Exchange.
On 09 March 2017, Paladin received notice from Overseas Uranium Holdings Ltd requesting to start a process to determine the fair market value of Paladin´s 75% share capital of the Langer Heinrich mine.
“CNNC´s actions are disappointing given the support the Restructure Proposal has received to date” stated Molyneux citing CNNC´s failure to proceed with the acquisition of an additional 24% stake in Langer Heinrich Mauritius (LHM) offered to them last year. He also claimed that China National Nuclear repeatedly refused to fund the working capital requirements of LHM.
Paladin said it intends to dispute Overseas Uranium Holdings’ actions unless an acceptable compromise can be reached with Overseas Uranium’s hostile take-over attempt.
“Paladin will provide its stakeholders with material updates as soon as it is in a position to do so. It is intended that Paladin´s shares will remain in suspension until Paladin has resolved how it will progress the Restructure Proposal or reach a viable alternative” according to the NSX statement.