In the meeting of creditors on March 18, 2008 in Melbourne, Australia, it was decided to sell the corporate shell of Lafayette Mining Limited. This is provided under the Deed of Corporate Arrangement (DOCA). This event has significant implication to the people of Rapu-Rapu, the whole province of Albay and all campaigners for the protection of our environment. Even the Philippine government has a stake in this development.
The first implication is that operationally, Lafayette is history! In spite of all previous declarations by the company in February 2008 that everything was “business as usual”, the decision during the meeting of creditors was an incontrovertible proof that the company is out of business. Retrenchment is confirmed. Heavy equipment no longer prowl the mine site like predators as they once did on the island. Local residents confirm that activity has been minimized to the most unremarkable chores. Even security guards have gone lethargic in their duties, as observed when they would not even challenge the passage of residents through the area unlike before when the former jealously prevented “outsiders” from crossing the boundaries.
The Lafayette web site has been taken down! What once were glamorous pages of a rosy picture of the company and the mine, a mere notice “Under Construction” greets the reader. The last time it was up in the Internet, the website declared the takeover by Ferrier Hodgson as Voluntary Administrator and price of Lafayette shares at 1.5 Australian cents down so much from the highest value of 28 Australian cents in 2000.
In the words of a priest, Fr. Archie Casey, “What an indictment of the government's ‘flagship’ mining project... and all those who have ‘stonewalled’ over the intervening period, to the detriment of the inhabitants of Rapu Rapu Island ."
The timing of the meeting was deftly calculated. It was done during Holy Week to subdue the news and its impact. Australia ’s Corporation Act required a company under voluntary administration to hold a first meeting of creditors within five business days of appointment of voluntary administrators. Since the voluntary administrators were appointed on December 18, 2007 , the first meeting was held on December 27. Within 28 to 35 days from appointment of administrators, a second creditors’ meeting to decide the company’s future would have been called per requirement of the Australian Corporation Act. Instead, the administrators applied in court for an extension to 60 days. Hence, the decision on the company’s future fell within the Holy Week according Lafayette the quietude of the occasion to softly leave the business world.
Under the Deed of Company Arrangement (DOCA):
§ The Deed Administrators will endeavour to maintain the corporate shell in order that it can be sold (subject to shareholder meetings approving the restructuring);
§ The Deed Administrators will undertake a sale process and invite expressions of interest to recapitalise the corporate shell;
§ The Deed Administrators will create a fund (''the Fund") for the payment of participating creditors' claims. The Fund shall comprise the realisation, and conversion to cash, of all assets of the Company plus any amount received from the sale of the corporate entity.
The DOCA would allow for the sale of the corporate shell, which may generate a return for creditors. A sale of the corporate shell would not be available to a liquidator.
The Save Rapu-Rapu Alliance rejoices over this victory. Nevertheless, we are not letting our guards down. We continue our vigilance. The mine has to be closed for good. Rehabilitation of the damaged areas must be done by Lafayette at the soonest time. Other options for the development of Rapu-Rapu must be taken in close consultation with its residents.
SARA bids Lafayette: Pay up and clean up before you clear off.
SAVE RAPU-RAPU ALLIANCE (SARA)
March 31, 2008
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