Kagara Zinc Limited’s (ASX: KZL) share price has sunk by 78% to close at 12 cents, and shares have been in a trading halt since 23rd April 2012, as administrators have been called in to restructure the company. All of the company’s operations have been placed on care and maintenance, and 216 staff made redundant. According to the administrators, the company has assets valued at $411m, with creditors owed between $85m and $95m.
The strong Australian dollar and falling commodities prices have been blamed for the fall into administrators hands. According to Kagara managing director, Geoff Day, the combined effect was a 30% cut in the effective price of its metals.
It’s unlikely that Kagara will survive, with the most likely outcome a sale of its assets. With falling commodity prices and fixed costs, it will be tough to find buyers for the company’s assets at anything above fire-sale prices, and it’s unlikely to realise anything like its book value of $411m. There may not be much left for shareholders.
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This is similar to mortgage sale or another name "bankrupt"
after sold, the creditor will take away $85m-$95m first, then anything left over will split between all shareholders.
if it sold under 100mil, all shareholder will get nothing.
KZL Price at posting:
12.0¢ Sentiment: None Disclosure: Not Held
