Here’s a story from The Australian yesterday that goes into good detail.
Potentially concurrent sale process that is mentioned in the story is related to this halt?
Altura Mining’s 13,000 Australian shareholders face the prospect of being wiped out after US bondholders owed $250m by lithium producer Altura Mining emerged in control of the collapsed company after appointing both receivers and voluntary administrators at the struggling miner.
The loss-making lithium miner collapsed on Monday after a syndicate of hedge funds called in KordaMentha as the company’s receivers ahead of the expiry of a standstill agreement on the company’s estimated $250m in debts, and despite promises a company-saving raising would have launched this week.
Altura’s board was caught by surprise by the move by its lenders, believing a Canaccord Genuity-led raising worth about $200m that would largely have cleared the company’s debts was all but locked in, awaiting only the sign-off from its lending group.
But instead its secured lenders – including Castlelake, CarVal, Nomura and Clearwater Capital – blindsided the company, demanding immediate repayment of their debts and appointing KordaMentha as receivers and Cor Cordis as voluntary administrators on Monday.
KordaMentha said in a statement it would immediately launch a process to sell or recapitalise its Pilbara lithium assets, hoping to complete an asset sale by Christmas. But industry sources say the time frame appears extraordinarily tight given the dire conditions still faced by lithium miners in the near term.
While the longer-term outlook for the sector is looking up as China and Europe look to batteries and renewable energy to power their economic recovery from the coronavirus crisis, prices for lithium concentrate from WA mines are still half of what they commanded two years ago.
Global majors such as Albemarle and SQM are already locked into separate WA lithium projects, and local rivals Pilbara Minerals and Galaxy may struggle to win the approval of their own shareholders and lenders to add another loss making operation to their existing operations, irrespective of the medium-term outlook for the sector.
There is little doubt Altura was in trouble. It had $2.3m in the bank at the end of June, plus another $5.7m of bank letters of credit for lithium shipments to be loaded in July, with the company having burned through $42.8m in the previous 12 months.
But Altura believed it had until October 31 to complete a recapitalisation, and the demand came days ahead of the expiry of an agreement with its lenders to waive payments and covenants on Altura’s estimated $250m worth of debt.
Sources say Canaccord had already locked in a cornerstone Chinese investor for about $60m of the proposed equity raising, with institutional investors showing enough interest to ensure underwriting agreements for the rest. But on Monday Altura’s lenders took the unusual step of appointing both receivers and voluntary administrators, locking in their influence over the future of the company and its assets.
Lenders holding security over all, or substantially all, of a company’s assets are legally allowed to appoint voluntary administrators as well as receivers. But corporate convention dictates that they generally allow a company’s board to separately pick independent voluntary administrators to avoid public and legal backlash from trade creditors, workers and shareholders.
It is understood Altura’s board had already lined up FTI Consulting as voluntary administrators if the equity issue ran into trouble, but were caught flat-footed by the sudden about-turn by its lenders and were unable to make their own appointment before losing control of the company.
The decision leaves 100 workers facing the sack as KordaMentha looks to put Altura’s Pilbara lithium mine into care and maintenance and receivers Richard Tucker and John Bumbak consider whether to try to return to the equity raising, or look to revive stalled negotiations over a potential sale of Altura’s assets.
Altura had been running a sale process alongside the discussions over a recapitalisation.
PLS Price at posting:
39.0¢ Sentiment: Buy Disclosure: Held
(20min delay)