2006-05-09Staff Report 2 "By Wezi Tjaronda WINDHOEK Production at the country's only copper operation, Ongopolo, has started again after Weatherly International PLC, which bought shares in the mine, transferred over N$14 million. Production had to be stopped because the old Ongopolo was effectively bankrupt up until April 25, when the government, Ongo-polo and Weatherly International guaranteed lenders and secured the signing of the Heads of Agreement. ""Production had ground to a halt because the Old Ongopolo had no money to pay for supplies,"" said Ongopolo's Chief Financial Officer, John Caithness yesterday. The mining company owed in excess of N$500 million. He said the mine will take a while to reach full production because it is having start-up difficulties with some of its suppliers. When all the agreements have been completed, Weatherly International will have approximately 50 percent stake in Ongopolo, the employees will have 3 percent, while the mine's previous secured creditors will transfer their equity to shares. The Ongopolo management last week wrote to its creditors or suppliers that through Weatherly support, the new Ongopolo would pay for all services rendered to it after April 25 on normal commercial terms. ""In the short term and until Weatherly has established its credentials, this includes any advance payments that may have been reasonably required,"" said the financial officer. As far as the debt that was owed during the old management is concerned, the company said these debts would be paid in full provided the unsecured creditors' total amount did not exceed N$120 million, with the first 50 percent of the final amount to be paid by Weatherly within 18 months after completion of the restructuring of the new company and the rest being paid over a period of three and a half years. The reconstruction of the company should be completed by June 2006. Caithness said in the letter that in case the completion is not achieved, Weatherly would not be liable for the mine's old debt. Ongopolo's unsecured creditors, or creditors that have no guarantee, are expected to amount to more than N$120 million, and according to Caithness there had been debate as to whether Weatherly's investment in the mining company would be viable if it accepted the past financial burden. The signatories to the Heads of Agreement last month however agreed that the terms for the unsecured creditors should hold and up until now, 85 percent by value of the unsecured creditors have accepted the terms on condition that all unsecured creditors are treated the same way. He cautioned in the letter that any bankruptcy proceedings would result in zero return to the unsecured creditors but after June when completion is achieved, these creditors would be paid ""substantially in full whereas the guaranteed and secured creditors are receiving only 35 cents in the dollar and in shares, not cash"". The mine management in the letter also asked its creditors to sign the statement indicating whether they agreed to the arrangement in principle and also to detail their understanding of Ongopolo's debt as at April 25. ""In considering this letter we ask you to bear in mind that if the action of any creditor breaks the line, then it is a very real possibility that the reconstruction may no longer be feasible and Completion may not occur,"" he cautioned. He added that this might be detrimental to Namibia, which has no other copper operation, to the employees and the town that depends on the Ongopolo for survival." 2006-05-09Staff Report 2
