home Equities T.PDN: Creditor leaves Paladin renewal in doubt

T.PDN: Creditor leaves Paladin renewal in doubt

The French creditor that forced uranium miner Paladin Energy into administration is now threatening to torpedo its recapitalisation.

Creditors of the collapsed miner yesterday voted in favour of a restructure proposal put forward by unsecured bondholders that would have the company continue operating as a going concern and be reinstated to the Australian Securities Exchange.

Under the terms of a deed of company arrangement, existing shareholders will surrender 98 per cent of their shares as part of a debt-for-equity swap. The recapitalisation will also involve a $US115 million debt raising.

However, Paladin’s offtake partner Electricite de France, which forced the miner into administration in July by demanding repayment of a $US277 million ($361 million) loan, has rejected the plan claiming the proposed DOCA is unfairly prejudicial towards it.

EDF has warned it may pursue legal action to have the deed terminated.

Paladin administrator and KPMG’s head of restructuring services, Matthew Woods, said he respected the right of individual creditors to act in their own interests and time would tell whether Electricite de France, applied to have the DOCA set aside.

He said he was unsure of EDF’s ultimate objective but noted it had not put a recapitalisation proposal to administrators.

Mr Woods said he had also received several calls and emails from aggrieved Paladin shareholders unhappy with the deal.

“That’s to be expected and they are entitled to be disappointed but it’s hard to see any alternative to the proposal other than liquidation,” he said.

The setback comes just as the uranium price begins to show signs of life after years in the doldrums.

The price of yellowcake hit $US25.50/lb yesterday after Kazakh state-owned miner Kazatomprom announced this week it would cut uranium production 20 per cent for the next three years in response to a stubbornly low price for the energy commodity.

Paladin grew from a relatively unknown microcap explorer to a sizeable uranium producer last decade, with flagship Namibian mine Langer Heinrich as the jewel in its crown.

Under the leadership of former managing director John Borshoff, shares in Paladin skyrocketed from one cent in 2003 to $9.66 in 2007.

But the heavy debt it took on to build a uranium mine from the ground up haunted the company when uranium prices plunged after the Fukushima nuclear disaster in Japan in 2011.

Paladin shares have been suspended since July, having last changed hands for 4.7¢.

Source: The West Australian

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