Namibian Minerals is placing some of its South African subsidiary companies into liquidation, which is a provisional winding up order which will be made final in approximately six weeks.
Following the disruption to operations by the accident to its NamSSol mining system in January and the resultant cash flow impact, the company had been urgently seeking financing to address its working capital requirements, in particular to secure the interests of its creditors. Meanwhile, the company continued to pursue an insurance claim and expected a buildup in production while commissioning of its new Nam 2 seabed crawler continued offshore Namibia.
The company had been progressing a number of financing options. On Feb. 12, 2001, the company announced in Stockwatch that Canaccord Capital (Europe) Limited had sold to investors outside Canada six million common shares for proceeds of $8.25-million (U.S.) and $2-million (U.S.) principal amount of 8-per-cent Series A convertible debentures for gross proceeds of $10.25-million (U.S.), subject to filing of a short-form prospectus and to regulatory consents. Canaccord had advised the company that it was confident of raising up to $20-million (U.S.). At the same time, the company was advanced in discussions with a number of parties, including major participants in the diamond industry, for a bridging facility, pending completion of the above financing. The government had pledged $20- million (Namibian) of participation. In addition, the company was finalizing the sale of its least efficient and least productive vessel MV Ivan Prinsep for $4.4-million (U.S.).
However, while offering a three-month capital repayment moratorium, the company’s bankers have not provided sufficient certainty as to their intentions after three months, nor were they willing to release security over the MV Ivan Prinsep to cover a sum due to them and release surplus proceeds for working capital purposes. A term sheet provided to the company on Feb. 15, 2001, set out these terms. Subsequent discussion and a revised term sheet have failed to elicit the comfort which the company requires for its potential new investors. This uncertainty and mounting pressure from its creditors has left the company with no alternative than to seek liquidation of its South African subsidiaries. The company is committed to continuing discussions with its bankers to seek a reasonable and long-term solution to the present position.
