Stark has taken the extraordinary step of issuing an early...

Stark has taken the extraordinary step of issuing an early redemption notice on the insupportable grounds that Chemeq has not met the covenant in circumstances where Stark was well aware of Chemeq’s views.

In a situation like this, the normal process is Stark will demand from CMQ proof that it met the covenant (Stark/Mizuho had done this once before in July 2005 which Melrose announced to the market). It will surprise many if Stark did not question CMQ and if it did why Williams did not inform the market? In the likely event CMQ had provided Stark with the 'senior counsel advice' Stark must have seek their own legal advice before acting.


“Stark had previously sought to renegotiate the terms of the bonds to improve the bondholders’ commercial position.”
Should this be announced to the market? IMHO Stark must have told CMQ it had not met the covenant and tried to negotiate to protect its commercial position without resorting to redeeming the bonds.

Covenant was to be met by 30 June 2006. Why was there such a lengthy delay to 7 July before Williams announced it met the covenant?

When did Williams become aware of the dissenting views from 1) Inviro 2) Stark and 3)Ernst & Young and why wasn’t the market informed earlier?


What are the possible coming events?

1) Do not underestimate the parties – there will be some who will be battling hard to buy time. If they can prevent the sp from a ‘total collapse’ they may be able to off-load their shares.

2) CMQ will vigorously fight the redemption notice buying some time. This may take some time for a court or other ADR (alternative dispute resolution) to rule whether the redemption notice is valid.

3) Will it surprise me, if CMQ rushed into a deal with PCAS? One must asked the question why did Williams announced the non-binding Letter of Intent? Most if not all the information had already been announced before. CMQ's desperationto do the deal will put it in a very weak position to bargain with PCAS

4) Will Stark stand idly by waiting for the court or ADR to resolve the validity of the redemption notice or will Stark apply to the court to have CMQ placed in liquidation?

Watch this space!