PERTH (miningweekly.com) – The liquidators of Kagara have decided to accept a takeover offer from Auctus Chillagoe for Kagara’s interest in ASX-listed Atherton Resources, in order to repay debts.

Kagara and its wholly owned subsidiary Mungana hold a combined 67.55% interest in Atherton, which became a takeover target in September. Auctus was offering to acquire all the shares in Atherton for 20c each through an on-market takeover.

At the offer price, Kagara’s holding in Atherton was valued at about A$43-million.

The Kagara liquidators said on Thursday that, by accepting the offer, all of Kagara’s more than 300 employees would receive a full return of their claims, while unsecured creditors would likely receive about 30c on the dollar for their debts owing. Unsecured creditors of Mungana would receive about 15c in the dollar for their debts owing.

“This is a strong outcome in the context of a liquidation, which normally sees just a few cents in the dollar returned for unsecured creditors, at best,” said FTI Consulting senior MD for corporate finance and restructuring Michael Ryan.

“The global downturn in commodity prices has made it difficult to extract value from Kagara’s assets, so we are very pleased to be able to provide a full return on the claims owing to over 300 employees of Kagara and a meaningful return to unsecured creditors.”

Kagara’s earlier asset sales had seen the company’s secured creditors repaid in full.

Rather than a fire-sale of Kagara’s remaining assets, which Ryan said would have delivered a poor return, the liquidators elected to repackage the company’s assets into Atherton, which was initially called Mungana Goldmines, and then back the restructuring of the board.

The liquidators also decided to sell Kagara’s interest in the Chillagoe project to Atherton for A$15-million of convertible notes, while reaching a settlement with Mungana that saw Mungana withdraw all of its claims against Kagara, which totalled up to A$30-million. 

This settlement provided the opportunity for a better dividend to other creditors owing to a materially smaller total creditor pool.

Atherton had previously advised its remaining shareholders not to take any action on the Auctus offer until a decision had been made by Kagara and Mungana.

Atherton was developing the King Vol zinc mine, in Queensland, where a recent scoping study estimated that some 35 900 t/y of zinc, 840 t/y of copper, 910 t/y of lead and 185 000 oz/y of silver-in-concentrate could be produced at the mine, delivering a net operating pretax average cash flow of A$35-million a year.