St. Gen, KWG unveil restructuring plan

As part of a joint restructuring plan, St. Genevive Resources (SGVE-C) and KWG Resources (KWGR-C) are asking most of their creditors to swap debt for an equity stake in the two companies.

St. Gen is asking its creditors — with the principal exceptions of its bank, Genoil (GNOL-C) and Icelandic Gold (ICEG-C) — to convert their debts, amounting to about $28.1 million, into St.-Gen shares on the basis of one share for every 20cents of debt.

One St. Gen creditor, affiliate Emerging Africa Gold (EAGI-C), is owed about $15 million and says it intends to pass on its share of St.-Gen stock as dividends to its shareholders.

St. Gen says the remaining creditors, who are owed about $6.5 million, will be paid in full.

For its part, KWG wants its creditors to swap their KWG debt, totalling about $14.9 million, into KWG shares on the basis of one share for every 40cents of debt.

KWG says its creditors include St. Gen, to which it owes about $8 million, and creditors of various wholly owned subsidiaries whose debts have been assumed by KWG, but excluding certain creditors representing minor amounts.

Should the creditors accept the restructuring plan, St. Gen’s issued and outstanding shares would increase to 200 million from 86 million shares, while KWG’s issued and outstanding shares would rise to more than 73.2 million from 36 million shares.

St. Gen and KWG now state that they will concentrate on only two gold-silver ventures: the Ametistovoe project in Russia and the Grand Bois project in Haiti.

The remaining assets held by both companies will be divested when “conditions are favorable.” To date, KWG has sold its 8 million shares of Joutel Resources (JTL-T) for $400,000, as well as half of its 49% option on Falconbridge’s (FL-T) Managua concession in the Dominican Republic, for $1.1 million. (KWG had a 5-year, $5-million earn-in agreement for the non-nickel assets at Managua.)

Creditors will meet Feb. 26, 1998, in Montreal to vote on the plan.