PASMINCO RESTRUCTURES

Pasminco Limited (“Pasminco”) today announced a significant restructuring to enhance shareholder value and ensure the company’s long term viability in an increasingly competitive global market.

Pasminco Chairman, Mark Rayner said: “The Board’s objective is to ensure the best possible outcome for Pasminco shareholders and address the company’s present financial difficulties.”

“In order to enhance shareholder value, the Board has decided to restructure the company’s operations and balance sheet as quickly and securely as possible by selling assets and reducing debt,” he said.

Discussions are progressing with the company’s principal lenders to ensure that appropriate liquidity support will be available, if necessary, during the restructuring period and a Memorandum to that end has been signed by the lenders and delivered to Pasminco.

Various combinations of asset sales have been carefully reviewed and subjected to detailed financial analysis to identify what is likely to be the fastest and most assured solution to Pasminco’s present difficulties. The restructuring proposed is subject to regulatory and other approvals. However, it is expected that asset sales discussions will proceed without delay with potential buyers, including those who have already registered interest in each of the mining properties. UBS Warburg is working with the company on the restructure and asset sales.

To achieve its objective, subject to necessary approvals, Pasminco will sell the Century Mine in Queensland, along with the already planned sales of the underground mines in Broken Hill, Elura and Rosebery. The company’s exploration interests, including the Dugald River resource, will be sold.

After these asset sales the company will have world class smelting assets in Australia, the US and Holland which deliver stable earnings and strong cash flows. 1999/2000 smelting earnings before interest and tax were more than $140 million and the Business Improvement Program has significantly improved the potential earnings stream from these assets. Pasminco has zinc metal production facilities in the three major market areas of the world and operates the largest primary lead smelter in the world. It has experienced smelting management and a lean workforce with demonstrated international operational and marketing capability.

“Pasminco will remain the world’s largest zinc and lead producer with potential for growth when opportunities arise”, Mr. Rayner said.

The restructure, to be implemented over the next twelve months will:

• 
  
• refocus the company to deliver more stable earnings by leveraging the business’ core zinc and lead smelting capabilities;
  
• reduce the company’s exposure to metal price volatility through disposal of its mining assets;
  
• cease exploration activity;
  
• streamline the organisation to dramatically reduce costs; and
  
• substantially reduce the company’s debt and foreign exchange exposure.
  

Proceeds from asset sales will be utilised to reduce debt and as appropriate close-out foreign currency hedges. By focussing on smelting, Pasminco will avoid much of the volatility in earnings arising from cyclical metal prices. It will have a strong balance sheet with low gearing and the potential to resume dividend payments.

Mr David Stewart has advised the Board that he will step down from his position as Managing Director and CEO, effective 31 July 2001. The Board thanks Mr Stewart for his contribution over the past nine years.

Mr Greig Gailey will be appointed as Managing Director and CEO and will take up office on 6 August. Mr Gailey most recently served as Chief Executive of Fletcher Challenge Energy in New Zealand, where he led the successful restructuring and development of the company until its sale earlier this year to Shell/Apache. His previous career, with BP, involved a number of senior executive roles in the upstream energy and minerals industries and in oil refining and distribution in Australia, the UK and Europe.

Further information please contact:

Trevor Shard
Group Manager, Investor Relations
Tel: 03 9288 9186
Mobile: 0419 584 515

Peter Griffin
Group Manager, Public Affairs
Tel: 03 9288 0463
Mobile: 0419 314 265

Return to Home