African Copper Plc, the tri-listed copper mining outfit, shrugged off threats of liquidation from Natasa Mining Limited Friday after the former accepted a proposal from Zambia Copper Investments that was later sweetened.
Chris Fredricks, Chief Executive Officer for African Copper, confirmed to Sunday Standard Friday night that they will vehemently defend the challenge that falls on the heels of African Copper’s EGM’s rejection of Natasa’s offer.
“Natasa has entered into negotiations with the bondholders today (Friday) indicating that they are going to file a wind-up of the company,” Fredericks told Sunday Standard, adding that “we are going to challenge it”.
Zambia Copper Investments (ZCI) was voted as the preferred bidder earlier in the week in a move that was pushing Natasa to the side-lines. ZCI announced Thursday that it has sweetened its offer to the tune of US $ 22.5 million that will be released in tranchees.
“The agreement under ZCI offer at this point in time provides more capital for the company (African Copper),” Fredericks added.
African Copper, which shut a mine in January after running out of cash, fell the most in London trading since going public in 2004 after the holder of a bond issue demanded immediate repayment.
African Copper slid as much as 51 percent.
The London-based company has breached the 150 million-Botswana-pula ($21 million) issue’s terms, Natasa Mining Ltd., owner of the bonds, said Friday in a Regulatory News Service statement. It petitioned the High Court of Botswana to wind up African Copper’s Messina Copper unit (otherwise known as Mowana mine), the bond issuer, the statement shows.
The copper producer agreed in March to a $15 million investment from Natasa in return for a controlling stake. In the following month, Zambia Copper Investments Ltd. offered $22.5 million in financing. African Copper stockholders rejected Natasa’s offer this month in favour of the proposal from Zambia Copper, which has a stake in three mines in the country.
African Copper declined 4.13 pence, or 39 percent, to 6.38 pence in London on Friday afternoon, posting the second-biggest drop in the 1,005-company FTSE AIM Index. The shares cost 76 pence each in the initial public offering. The company’s market value has shriveled to 9.36 million pounds ($14.3 million) from 35 million pounds when the stock began trading.
Investors bought and sold 37.1 million shares, 11 times the six-month daily average.
Sydney-based Natasa said it’s owed $25.6 million by African Copper, including an earlier loan. African Copper said Thursday it was seeking legal advice on Messina’s obligations. Zambia Copper will gain a 70 percent stake in return for its financing.
On Friday night, African Copper said it had made repeated attempts to repay the US $ 2.1 million of the debt acquired by Natasa and the US $ 1.5 million bridge loan provided by Natasa following demands made by Natasa.
“The offer proposed by Natasa would advance sufficient funds, on commercial terms, to procure all creditors of African Copper and its subsidiaries, to the extent required, are paid in full. It also proposes that on completion of the transaction the company’s existing shareholders will retain one percentÔÇömore than the fully diluted share capital than they would retain under ZCI agreement,” the company said Friday night after Natasa had put a counter-proposal under which it claimed that it owned close to 99 percent of African Copper.
On Tuesday, the financially embattled African Copper Plc had accepted its financial rescue following the latter’s decision to shoot-down proposals from Natasa.
Last week Thursday, African Copper’s EGM held in London rejected Natasa Mining Limited’s proposal paving the way for ZCI.
In a statement released Tuesday, ZCI said as part of the debt acquisition agreement all existing agreements with African Copper and MoolmanÔÇöthe mining contractor ÔÇô had been terminated, including the mining contract in relation to African Copper’s Mowana mine.
“In order to help secure African Copper’s future and accelerate bringing an important mine in Botswana community back into production, ZCI has agreed with African Copper that it will not seek repayment of the debt until at least the completion of the entire financing package,” ZCI said in a statement.
“The final effects of the offer and the debt acquisition will be incorporated into a circular to shareholders setting out full details of the proposed transaction and incorporating the notice of the general meeting and for proxy, the circular will be distributed to shareholders in due course,” ZCI added.
The African Copper, London AIM, Toronto and Botswana listed company, is operating Mowana mine, which is about 100 kilometers west of Botswana’s second largest city, Francistown.
Last month, ZCI said it had already transferred funds to a trust in the UK. It stated that it has improved its bridge loan facility offered it from $2.5 million to $10 million that will please many shareholders and maybe cheer its share price.
“As an indication of the seriousness of its intent,” ZCI said in a statement, “ZCI has transferred the full $10 million amount of the bridge loan facility to its solicitors in London, McCarthy T├®trault, to be held in trust at National Westminster Bank plc, Fleet Street, London branch for the purposes of the implementation of ZCI’s proposal.”
ZCI said the improved offer will satisfy all repayment obligations to Natasa in full, removing the ability of Natasa to force the owners of Mowana mine in Botswana into liquidation.
It will also pay African Copper’s bondholders and key trade creditors 50% of the total amounts payable to them under the ZCI terms in advance of the full implementation of ZCI’s proposal while protecting African Copper’s shareholders’ investment in Botswana.
“The full $22.5m offer from ZCI will satisfy bondholders and creditors and give shareholders in ACU the chance of significant upside in future operations,” it added.
Tom Kamwendo, Chairman for the ZCI, the Johannesburg Stock Exchange (JSE) and Euronext (Paris) listed company, added that they had put transparent funds in place that creditors can and will be paid according to the transaction timetable.
“We have blown Natasa’s offer and reservations out of the water. This package is quite clearly in advance of anything that they have come up with for creditors, shareholders and Botswana itself,” he said.