TORONTO (miningweekly.com) – Asia-focused miner Besra will file for financial restructuring under Canadian law after considering all available alternatives to “decisively” deal with its cost and debt structure and to narrow its strategic focus in an effective and timely manner.
The company on Monday stated that the proceedings would also facilitate a restructuring of its unsecured notes using a straightforward process otherwise unavailable to management.
“While we had reached agreement in principle with a large number of our note holders, there [is] no existing, streamlined formal mechanism by which the different notes may be dealt with efficiently and effectively in a single arrangement or compromise. These types of administration systems, which exist in Canada and the US, are effective; you can get things done,” CEO John Seton advised.
Besra’s board unanimously supported the decision.
The company's liquidity position had deteriorated as a result of negative cash flow from operations in Vietnam, caused by typhoons and government intervention, and a consequent inability to secure all required capital until its unsecured loan-notes were restructured. However, the company said subsidiary operations were recovering with Bong Mieu back in production and Phuoc Son preparing to restart.
A C$15-million financing deal was placed on hold, pending the outcome of the restructuring. In October last year, Besra inked an agreement with private investor George Molyviatis, the chairperson of InCoR Holdings. Besra had, to date, received a first tranche of C$2-million. Under the terms of the transaction, once the full C$15-million investment was made, Molyviatis would own an effective 50.9% stake in Besra.
The company expected to secure further equity financing once balance sheet relief had been provided as an outcome of the restructuring.