FH - Letter to Shareholders enclosing declaration
1 April 2005
Download FH - Letter to Shareholders enclosing declaration
(149 kb)
ASX RELEASE
Pasminco Group Restructure Proposal
Click here to download ASX RELEASE
Pasminco Group Restructure Proposal (118Kb)
27 September, 2001
Dear Pasminco Shareholder,
Most shareholders will be aware that the Board of Pasminco appointed John Spark and Peter McCluskey as Voluntary Administrators on 19 September 2001. A statement was issued to the Australian Stock Exchange that evening and trading in Pasminco shares ceased from the morning of 20 September. At this stage, it is not possible to state how long trading will remain suspended.
Shareholders will be aware from previous Company statements that the Board had been working with management during recent months to implement a strategy to sell the Australian mining assets. That strategy would have seen Pasminco generate cash to reduce its financial exposures and allow the Company to continue operating during this period of low metal prices, primarily as a leading smelting business. Pasminco had been operating with short-term liquidity support provided by its lenders to allow the Company to meet its commitments, however longer-term arrangements were needed and discussions with lenders were focused on securing a six month Standstill Arrangement. In simple terms, this Agreement would have extended a line of credit to enable Pasminco to continue operating until March 2002, without the need to meet loan and interest payments.
On the evening of Wednesday 19 September, it became clear that a number of Pasminco’s lenders were either unwilling or unable confirm their support by 28 September 2001, the last business day by which Pasminco was required to lodge its audited Annual Accounts and the Directors’ declaration with the Australian Securities and Investment Commission.
In the absence of a Standstill Agreement, the Board could not form the view that there were reasonable grounds to believe that Pasminco could meet all of its commitments as and when they fell due and the Board therefore placed the Company into Voluntary Administration.
The Administrators assume the powers of the Board and are accountable to creditors. In the case of Pasminco, we have three key goals:
- Conduct a full and thorough assessment of Pasminco’s financial position and develop an appropriate plan for future action, which will be recommended to a meeting of creditors. This could take a number of months.
- Keep the business operating as usual during this period.
- Once agreed by creditors, to implement a restructure of the business if it is to continue or implement a sale of assets if it is not to continue.
For the time being, the Administrators are continuing with the asset sales processes already underway in respect of the Broken Hill and Century mines.
Significantly for employees of the Company, it is clear that all employee entitlements are secure and will be honoured.
A transfer of shares or an alteration in the status of Members is not possible during this period of Voluntary Administration and it is currently not possible to state either if or when trading will be resumed in view of the Voluntary Administration.
The position will become clearer once we have completed the review of operations and considered a way forward.
Management and employees are cooperating fully with us as we work towards a future plan and shareholders will be advised once a clear forward plan for Pasminco has been agreed.
Click here to download files of:
- Ferrier Hodgson : letter to shareholders (21 Kb)
Pasminco Administrators Granted An Extension To Report
Pasminco Administrators Ferrier Hodgson have successfully applied to the Federal Court for an extension in the time allowed for them to convene the second meeting of creditors at which a proposal for the company’s future will be put forward. This meeting must now be convened no later than 7 April 2002. Prior to this application, the meeting was required to be convened by 7 January 2002.
The primary reasons for seeking the extension relate to the complexity of the Pasminco business and the fact that all relevant information and reports necessary to formulate a proposal optimal to all stakeholders, could not be finalised on the previous timetable.
There are a number of regulatory and fiscal issues to be resolved to enable the Administrators and stakeholders to arrive at the decision on the most appropriate means of dealing with Pasminco’s assets and liabilities. The sale process for the Century mine am continuing but is also incomplete. Accordingly, it would not have been in the interests of all stakeholders to proceed with the second meeting of creditors in early January.
For further information contact:
Trevor Shard
Group Manager Investor Relations
++61 (3) 9288 9186 or 0419 584 515
Peter Griffin
Group Manager Public Affairs
++61 (3) 9288 0463 or 0419 314 265
Dear Shareholder
RE: PASMINCO LIMITED
(ADMINISTRATORS APPOINTED) ("PASMINCO")
Shareholders will know that John Spark and Peter McCluskey of Ferrier Hodgson were appointed as Administrators of Pasminco on 19 September 2001.
As Administrators, we are required by the Corporations Act to investigate the affairs of the company and recommend a course of action to creditors in relation to its future. In this regard, we expect that a proposal will be put to creditors for the restructure of Pasminco.
Our report will be presented to a meeting of creditors no later than 14 January 2002. Ultimately, it is the creditors who will decide the future of Pasminco by either accepting or rejecting the proposal made to them.
While we are continuing to review the affairs of Pasminco, it is too early for us to advise shareholders on the possible proposal that will be put forward to creditors. There are, however, a number of courses of action that can be followed including:
- Creditors entering into a Deed of Company Arrangement that may allow Pasminco to continue trading:
- For a limited time to permit the orderly sale of the assets for payment of liabilities; or
- Indefinitely in a new form while either some cashflow from operations and/or funds from the sale of assets are used to reduce debt; or
- That Pasminco be liquidated.
Pasminco is continuing to operate its mines and smelters in Australia and overseas while we work with management to determine the most appropriate way forward. Pasminco is being supported financially by a $300 million finance facility provided by a number of Pasminco`s lenders to us as Administrators, which ranks ahead of the company`s other debts.
The sale process for the Century mine in Queensland and the Broken Hill mine in New South Wales is continuing and, at a challenging point in the economic and commodity price cycle, we are working to realise acceptable prices for those assets.
However, Pasminco remains in a precarious financial position. This is principally as a consequence of a number of key issues, including:
- The appointment of Administrators has crystallised the position of the major part of Pasminco`s existing currency hedging position. It gave parties to the hedging contracts the right to convert exchange losses to debt. To date, 70% percent of these contracts have been converted and this has increased Pasminco`s debt by about $650 million.
We expect that should the remainder of the contracts be converted, this debt will be increased further given the current value of the Australian dollar to the US dollar.
- The world market for zinc continues to be depressed. On 14 November 2001, the zinc price was US$807 per tonne compared to US$1,049 per tonne at the same time last year. The following graph shows movements in the zinc price over this period. The effect of these sustained low prices has been to depress sales revenue and the value of Pasminco`s assets.
The effect of Pasminco`s current financial position is to fully erode the capital of shareholders in the company. This means that even if all of the available Pasminco assets were sold, the proceeds are unlikely to be sufficient to repay the total debt.
Regrettably, there now appears to be no realistic prospect of any funds becoming available for shareholders. As a result, it is also unlikely that Pasminco as it currently exists will trade again on the ASX.
We are presently focused on the completion of our review of Pasminco`s affairs and the formulation of a proposal to be put forward to creditors.
Shareholders should also be aware that a 2001 annual report will not be made available to shareholders at this stage. This decision was based on the view that the status of Pasminco had changed dramatically since 30 June 2001 and it would be impractical, due to the difficulty in attributing appropriate carrying values to major assets, to distribute a meaningful report to shareholders. In addition, it was agreed with ASIC that an annual general meeting would not be convened at least until after the meeting of creditors which is expected to be held no later than 14 January 2002.
This letter to shareholders is being sent as a condition of ASIC`s support of the decision of the Administrators to delay reporting to shareholders and to the postponement of the annual general meeting until after the meeting of creditors which is to be held by 14 January 2002.
However, we will continue to keep you informed of any key developments during the coming months and will advise you of the proposal we put forward to creditors and the outcome from the meeting of creditors. Major announcements and information will be posted on the Pasminco web site at www.pasminco.com.au while any specific questions can be referred to Pasminco on 1800 812 548.
Yours faithfully
JOHN SPARK
ADMINISTRATOR
PETER McCLUSKEY
ADMINISTRATOR
Download a PDF Version of this letter
Return to Home