the story so far, page-18

Hi Pelm,

I have the same thinking as dreadnought. There are a range of creditors that have priority ranking and this was a dispute aimed at resolving the ranking so that PLV could move forward. There was a general security deed between PLV/WEG and Cockatoo mining which had first priority. Below that was a deed of cross security which:

"The security interests and charge to be granted by each joint venturer under the Deed of Cross Security will take priority over all other mortgages, pledges, liens, charges or other forms of security interests, except the existing security created under the general security deeds…."

Letter of credit holders also have a security ranking (lower imo). The deed of cross security has the following purpose:

"The Deed of Cross Security becomes enforceable if a joint venturer fails to pay any cash calls or other monies due under the Joint Venture Agreement or the Deed of Cross Security and such failure to pay continues for a period of 14 days. Upon such an event occurring in respect of a joint venturer, the other joint venturer is entitled to exercise certain powers under the Deed of Cross Security to enforce the security interest and charge granted by the defaulting party, including the power to sell, transfer or otherwise dispose all or any part of the defaulting party’s JV Interest…"

So briefly a plausible scenario is that WEG failed to meet a cash call, so PLV invokes its right to take 100% of Cockatoo and proceeds to sell WEG's half (doesn’t have to be half) to a party that will make the cash call. WEG jumps up and down, sending legal letters yada yada yada. Mr and Mrs Nice rightfully say we are happy to front up the $$ as long as WEG renounces their legal claims and we acquire the same ranking position that WEG themselves had. Stalemate. PLV can't move forward because WEG is playing hard ball and sure as hell doesn’t want to go backwards. Someone has to do something radical as everyone's patience is being tested. That was the first release yesterday.

In a prior post my position was that WEG wanted out. That was her positioning in introducing SS&T by arranging a complete buy out of her stake. I suspect an offer was on the table for WEG this time also. but probably required her to accept a loss. Her removal from the board is huge and suggests she has signed on the dotted line. That was the second release yesterday, stemming from pressure applied via the actions of the first release.

Two excellent releases yesterday that will clear the way forward. That's my reading of it. Below is the source of the quoted sections I provided above.

Cheers
Bleasby

Pg 25 – 2012 Oct 29 AGM Report
Deed of Cross Security
The Deed of Cross Security secures each joint venturer’s obligations to pay its indebtedness in respect of called sums and other moneys due but unpaid which the grantor is at any time liable to pay to or for the account of the manager or any other joint venturer under the Joint Venture Agreement or the Deed of Cross Security. Subject to Shareholders approving Resolution 8, each joint venturer will:

(i) grant security interests to the other joint venturer and the manager (jointly and severally) in its rights and interest in personal property; and

(ii) charge to the other joint venturer and the manager (jointly and severally), its rights and interest in non-personal property,

in respect of the Joint Venture, including its percentage share of the tenements and all other Joint Venture property and its percentage share of the products produced by the Joint Venture. The security interests and charge to be granted by each joint venturer under the Deed of Cross Security will take priority over all other mortgages, pledges, liens, charges or other forms of security interests, except the existing security created under the general security deeds between Pluton and Cockatoo Mining Pty Ltd and between WEG (if required) to be entered into on or about the same time as the Deed of Cross Security and any other ‘permitted security’, as defined in the Deed of Cross Security.

The Deed of Cross Security becomes enforceable if a joint venturer fails to pay any cash calls or other monies due under the Joint Venture Agreement or the Deed of Cross Security and such failure to pay continues for a period of 14 days. Upon such an event occurring in respect of a joint venturer, the other joint venturer is entitled to exercise certain powers under the Deed of Cross Security to enforce the security interest and charge granted by the defaulting party, including the power to sell, transfer or otherwise dispose all or any part of the defaulting party’s JV Interest, and use and apply any moneys realised from the exercise of such power to remedy the default.