A BATTLE between two copper-focused juniors, KBL Mining and Kidman Resources, will heat up today when Kidman’s chief delivers a default notice to KBL and appoints investigative accountants to the company.
The two base metals companies have been locked in a war of words as Kidman, which is a 9 per cent shareholder of KBL and holds security over its assets through a $12.6 million loan, has attempted to overthrow KBL’s board and questioned its solvency.
KBL’s noteholders are scheduled to meet in Sydney today to amend the terms of its convertible notes and Kidman’s managing director, Martin Donohue, also plans to be in Sydney to issue the default notice.
Kidman took an interest in KBL in November when it took control of the two-year loan, and its stake in the junior, from Capri Trading, a family company associated with Geoff Kinghorn.
His father is RAMS founder John Kinghorn.
The $12.6m is scheduled to be repaid by March 15.
KBL had been in talks with lenders to refinance the loan and fund development of a gold asset and has argued that Kidman’s recent moves on the company is to frustrate the board’s efforts to refinance the company by creating corporate uncertainty.
“They want to get us in a situation where we can’t refinance the Kidman debt,” Stephen Lonergan, KBL’s in-house legal counsel, said.
“As a lender they can call a default under the provisions of the loan agreement ... they are busy with teams of people trying to find an event of default.”
Kidman Resources lodged a statement with the Australian Securities Exchange on Monday requesting key information from KBL on its financial position, warning failure to do so would constitute an event of default.
“Kidman is concerned about KBL’s ability to repay the $12.6m it owes to Kidman and the debts it owes to other parties,” the company said.
KBL said it had given Kidman a “huge” amount of information yesterday morning and that there was a team of Kidman’s consultants visiting its NSW mine on Thursday.
“There is no basis for declaring any event of default on a technical basis,” Mr Lonergan said yesterday.
Kidman had also attempted to stop KBL’s noteholders meeting today, arguing that its target had attempted to change the conversion ratio for the notes without shareholder approval.
Mr Lonergan said today’s meeting of noteholders was to approve extending the maturity date by six months to create space between the repayment of its refinance and the repayment of the notes.
He added that if there was a change of control of the company most lenders would not proceed with the lending arrangements KBL had been negotiating.
“If they can engineer a situation where we can’t refinance the debt because there is a change of control ... they have us,” he said.
“We are in the worst of possible worlds. We have a critical lender who is basically looking for every excuse to default us.
“They want to get control of the company and its assets without doing a proper takeover.”
KBL Price at posting:
2.6¢ Sentiment: None Disclosure: Not Held
KDR Price at posting:
5.6¢ Sentiment: Hold Disclosure: Held
