Crown defaults on debentures (September 03, 2001)

Denver — Financially beleaguered Crown Resources (CRRS-O) says it will not be making its final, US$15.4-million payment, thereby defaulting on its 5.75% convertible subordinated debentures. The payment was due in late August.

The Denver-based junior has been in negotiations with the debenture-holders and hopes to secure financing for at least US$3 million, which would be used to restructure the company.

Ninety per cent of the funds from the financing will be set aside in escrow to restructure the debentures, as well as move forward on permitting the Crown Jewel deposit in northeastern Washington state.

Newmont Mining (NEM-N), which picked up a 54% stake in the deposit through its acquisition of Battle Mountain Gold, recently returned the property to Crown in exchange for a sliding-scale royalty interest.

Crown may still seek protection from its creditors and file a plan of reorganization under federal bankruptcy law to complete the restructuring and recapitalization of the company.

The debentures stem from the 1991 acquisition of the Kettle River mine, which Crown later sold to Echo Bay Mines.

The company recently had its shares delisted from the Toronto Stock Exchange for failure to maintain minimum listing requirements. It retains a 42% interest in Solitario Resources (SLR-T).