Troubled Australian zinc producer
Pasminco, which had suffered heavy currency-hedging losses and was heavily indebted from the development of its large Century lead-zinc deposit in northwestern Queensland and its takeover of Savage Resources, concedes that without a standstill agreement from its creditors, it can not be certain of meeting all its payments. With the deadline for filing its financial statements looming, Pasminco put itself into administration, and its shares were suspended from trading on the Australian Stock Exchange.
Management firm Ferrier Hodgson, which Pasminco appointed to manage its affairs, moved immediately to negotiate a A$300-million line of credit with Pasminco’s bankers. Pasminco’s assets are estimated at A$3.3 billion, and total debts amount to A$2.9 billion.
Under the administrator, trade creditors and employees will be paid out of existing assets and out of the new line of credit. Ferrier Hodgson estimates that the amount owing is A$450 million.
Financial creditors, who are owed A$2.4 billion, would be asked to accept a restructuring proposal in 3-4 months. A meeting of financial creditors was scheduled for late September in Melbourne to ratify the appointment of the administrators.
The Century and Broken Hill mines, which had already been put on the block by Pasminco, are still for sale, but the administrator promises “no fire sale of assets” and says the mines will not be sold unless the price meets expectations. One bid is already in for Broken Hill, and Pasminco was expecting a second.
Among those thought to be preparing bids for Century are
Pasminco had previously said its smelting operations — three plants in Australia and one each in the U.S. and the Netherlands — were not for sale, but the administrators have indicated they will be looking at all the assets. It has been speculated that the Budel Zink plant in the Netherlands, which would have taken about half of Century’s concentrate production, might be part of a package with the mine.
Pasminco lost A$716 million on revenue of A$2.3 billion in the year ended June 30, against earnings of A$23 million on A$2 billion in revenue in fiscal 1999-2000. Its A$3.3 billion in total assets included a A$1.1-billion value placed on “mine and development properties held for sale,” an indication of what it expects to get for Century and its other mines. Of its A$2.5-billion total debt, A$1.1 billion was current interest-bearing debt. A further A$400 million was off the balance sheet.
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