Rapu Rapu group to file for rehab

Philippine Daily Inquirer
Last updated 03:37:00 12/19/2007
http://business.inquirer.net/money/topstories/view/20071219-107726/Rapu_Rapu_group_to_file_for_rehab

MANILA, Philippines -- The Rapu Rapu group of companies will seek court protection this week from creditors following a decision of its Australian parent, Lafayette Mining Ltd., to go under voluntary administration, its top Philippine official said.

Carlos Dominguez, chairman and president of Lafayette Philippines, which oversees the Rapu Rapu group, said the Philippine units would file a petition for rehabilitation so they could continue normal operations.

He said this was the best way to protect the group’s stakeholders, particularly its host communities, employees and the environment.

The rehabilitation petition is expected to result in a court order instructing the group’s present creditors and suppliers to continue their services and transactions with the local companies for as long as they were paid on cash basis, the group said in a statement.

Debt payments, under the petition, will be suspended until the court has approved a rehabilitation plan that will fairly settle all outstanding debts and ensure the continued operations of the company.

The voluntary administration of Lafayette Mining was reached after its board deemed that it could not continue to meet its obligations as and when they fell due.

Following Australian rules, two administrators have been appointed to take control of Lafayette Mining and to find ways to lighten the company’s debt burden through the sale or restructuring of bank debts and/or raise new capital.

“In the end, the administration process in Australia and the rehabilitation in the Philippines will make the local units stronger financially by addressing its longstanding issues regarding under-capitalization, over-borrowing and poor hedging deals,” Dominguez said.

Negotiations with new investors are still continuing, he said. Based on current term sheets, the investors will put in new money into the local units and buy the debt papers, wiping out its debts and allowing the operating companies to use its income for operations and community projects.

“This temporary legal process we are going through is actually a blessing for the Rapu Rapu project because it will finally resolve the financial issues the local management team has been urging Lafayette Mining to address,” Dominguez said.

Edited by INQUIRER.net