Not even KordaMentha know what the full proposal is.
What has been offered and accepted by the Administrators is a bridging loan.
I'll take some parts out of the A40 announcement to substantiate.
Bridging loan
"The Loan Facility Agreement provides short term bridging finance for the Group ahead of the proposed DoCA."
KordaMentha doesn't know
"The Loan Facility Agreement contemplates that CHE or its nominee will submit a deed of company arrangement proposal (‘CHE DoCA’
for consideration by the Administrators and creditors of the Group."
There is no proposal, and CHE have stipulated that the Loan Facility Agreement is available for draw down for working capital purposes, subject to the consent of CHE.
What I also find interesting is what took place prior to yesterday's announcement in the below document.
https://kordamentha.com/getmedia/ea...tice-to-creditors-re-s447A-application-RST-RC
Obviously that all took place as a result of Galaxy having stronger voting rights and KM was aware of it. Though their role as I understand it is to restructure and negotiate the best deal for all of the creditors. But what I take issue with is that there is no offer from CHE other than a loan facility and we are not sure how this might affect the creditor voting now. Are they entitled to a vote now having replaced Galaxy as the secured creditor? And is the loan secured against anything, or just an agreement until they submit whatever form of DOCA they like, which may end up being only slightly better than the offer that Galaxy made?
Some of these creditors might be better off in the long run with the offer that Galaxy has made, as there is no certainty as to what CHE can really bring to the table or if their plan will ever receive FIRB approval given recent agreements of the United States and Australia in rare earths and lithium.
Which comes to this clause in the agreement.
"In the event that the CHE DoCA proposal is not passed at the second meeting of creditors, provided that the CHE DoCA proposal was submitted on or before 5 January 2020, an early payment fee 15% will be payable to CHE."
In the goal to get as much return for the creditors, I get the feeling that the administrators have swallowed a dangerous pill and may at some point have no alternative than to place the company into liquidation. Will that 15% be payable then? Not really possible is it?
The thing is, as I see it, for Galaxy, all is not lost.
Let's look at it this way, the creditors decide that Galaxy's DOCA is the best option, for reasons only they can explain, which I kinda pointed out earlier in this post.
It seems to me that CHE have provided a timeframe, something which KordaMentha kinda wanted to extend to anyhow. Coincidence?
If Galaxy's offer does get up from here, it's our current offer plus the 15%? - Or who is responsible for that?
Just one more thing... If anyone from KordaMentha is reading this and you're thinking of expanding into Canada, you might want to introduce yourselves to Nemaska Lithium. I have a feeling they might be needing some restructuring of their own soon.
