gobbledygook!!, page-3

First point is that YA Global are proposing a variation to the current Deed Of Company Arrangement whereby they (together with Gordon Toll/Coffee House Group) aim to take 95% of the company and leave shareholders with a paltry 5% in the yet to be relisted company.

However the YA Global proposal had certain conditions that had to be met in order for them to proceed or for the proposal to "Complete".

One of the most important conditions (and one generally for CMR) was that CMR was to be readmitted as a Full Joint Venture Partner. This would require that CMR pay the outstanding debts/cash calls against it, and which are owed to HNC(HAR). And while this seems straight forward there is more to it. We are of the understanding that there are clauses in the Joint Venture Agreements that allow HNC(HAR) to acquire 100% of the company and all its assets and tenements at a substantially reduced price if CMR remained as a Defaulting Joint Venture Partner.

So one would assume that it was in HNC(HAR) best interest if CMR remained as a Defaulting Joint Venture Partner. Oh, you say....

And so CMR had to take HNC(HAR) to a private hearing (Arbitration) to resolve the issues.

And so the final outcome of the arbitration hearing is now that CMR has earned the right to pay the debts its owes to HNC(HAR) in order to be readmitted as a Full Joint Venture Partner and with full voting rights restored. And as this ruling has now been made one would expect that these debts can be paid by any entity putting forward a proposal that is acceptable to the creditors.

However one thorn that remains in CMR's side is that HNC(HAR) has insisted that the HNC(HAR) Receiver Manager remain in place for some reason. It seems that this reason is that there are future events that need to unfold or be determined or resolved between CMR and HNC(HAR) and as such the Arbitrator can not therefore make a ruling on them at this stage. However from the text it appears that these issues are not insurmountable and should be able to be resolved by a party putting forward an acceptable proposal.

So in summary CMR has earned the right to pay the debts its owes to HNC(HAR) in order to be readmitted as a Full Joint Venture Partner and with full voting rights restored which is a very important step in the right direction, however they are still to negotiate with HNC(HAR) with respect to the removal of the HNC(HAR) Receiver Manager.

I hope this has helped to explain the context of the document recently released by Ferrier Hodgson regarding the final determination of the arbitration hearing between CMR and HNC(HAR).

For additional information please refer to the Latest News section on the Friends of Compass Resources Web Site.

http://friendsofcompassresources.com