Paladin Energy’s existing bondholders look like they are going to have to put their hands in their pockets to stave off a complete collapse of the challenged uranium miner, which is in administration.
It is understood a deal is being worked through with Paladin’s administrator KPMG and bondholders, where they provide more funding for the company as part of a recapitalisation plan that may ultimately result in a debt-for-equity swap.
Bondholders, led by JPMorgan, are owed $US372m and are represented by Korda Mentha, along with law firms Gilbert + Tobin and Kirkland & Ellis.
Paladin collapsed into administration in July, as reported by The Australian at the time, after its French offtake partners EdF wanted the company to come up with $US277m for the reimbursement of uranium offtake pre-payments.
In its heyday, Paladin was a multi-billion-dollar company and one of the best performing stocks in the world.
But the company has suffered from a six-year downturn in uranium prices, and strict rules have recently been announced by the West Australian government, banning the development of any uranium deposits, with four advanced projects owned by other parties exempted.
Its most valuable asset is the 75 per cent stake it owns in the Namibian uranium mine, Langer Heinrich.
Its partner, China National Nuclear Corporation, weighed a potential acquisition of the asset but opted not to pursue any deal, leaving it in Paladin’s hands.
Some estimate its value to be at about $US500 million.
Even if the state-owned Chinese entity did buy the mine, it would be unlikely to provide the group with enough money to settle all of its debts.
As a secured lender, EdF would appear to be at the front of the creditors’ queue should Paladin go under.
Shares in Paladin have been suspended since early last month, when they were changing hands at just 4.7c each.
A decade ago, it was trading at more than $8 a share.
Beside Langer Heinrich, Paladin also owns the mothballed Kyalakera uranium mine in Malawi and a host of undeveloped uranium deposits in Canada, Queensland and WA.
Source: Business Review