The Board of Directors of Lafayette Mining Limited (Lafayette or the Company) appointed Messrs Rod Sutton and Peter McCluskey of Ferrier Hodgson today as joint and several Administrators of the Company pursuant to section 436A of the Corporations Act 2001.
The Administrators will immediately take control of the Company’s business, property and affairs.
As has been advised to the ASX, the Company has been working for several months with key stakeholders to restructure and recapitalise the Company which has a 74% interest in Rapu-Rapu Processing, Inc., located in the Philippines.
On 4 October 2007, non-binding term sheets were executed by the Company and the banks with a Special Purpose Vehicle (SPV) owned by a prospective Cornerstone Investor and the South East Asian Strategic Asset Fund (SEASAF). These term sheets outlined the basis of a series of transactions which could have recapitalised and restructured the Company. As part of these arrangements, a binding Option Deed was executed by the banks and the SPV under which the SPV was granted the right, but not the obligation, to purchase the bank debt exposure at a price which represented a discount to the face value of the debt. For a variety of reasons, the SPV elected not to exercise the option which expired on 30 November 2007.
Since that date, the Company and the banks have received a further proposal from SEASAF and a new group of financial investors. This proposal was similar in structure to the proposal announced on 4 October 2007, and since the date of its receipt it has been the subject of review by the banks.
As time has elapsed, the level of certainty that the series of agreements between the prospective investors, the banks and Lafayette (and other project and Company stakeholders), that are needed to ensure that Lafayette could continue to meet its obligations as an when they fell due, has diminished to a level that the Board of Directors of Lafayette no longer considers that they have reasonable grounds to continue to hold this view.
The Administration process will allow all options for either the sale of the operations or a restructure and recapitalisation of the Lafayette group to be fully explored.
It is expected that further details of the Administration process will be announced to the ASX by the Administrators in the near future.