15th Jun 2009 07:59
PAN PACIFIC AGGREGATES PLC
PROPOSAL RE CREDITORS OF PUMPTOWN QUARRY INC.
Pan Pacific Aggregates plc ("PPA" or the "Company"), the British Columbia based aggregates company, announces that, further to the announcement dated 1 May 2009 which mentioned that some of the funds recently raised would be used to help restructure its wholly-owned subsidiary, Pumptown Quarry Inc. ("Pumptown") before operations commenced, a proposal ("Proposal") is being put to the unrelated unsecured creditors of Pumptown (the "Creditors"). This is necessary as a number of Creditor claims have arisen following the acquisition of Pumptown that need to be settled on the same basis as the HSBC claim on the terms described below.
DETAILS OF THE PROPOSAL
Following the acquisition by PPA of Pumptown in June 2008, and as previously announced, a claim from HSBC for C$1.652m against Pumptown received in August 2008 is being settled by Pumptown for C$150,000, subject to certain agreed upon and acceptable conditions.
As part of this process, and in order to provide a solid financial platform to move Pumptown forward, Pumptown is undertaking a restructuring exercise with its Creditors whereby they will receive a proportion of their claims following their approval of the Proposal. This is necessary as there have been a number of "woodwork" Creditor claims which have been received since the acquisition of Pumptown in June 2008, and which need to be settled on the same basis as the HSBC claim. The HSBC claim represents approximately 76 per cent. of the total Creditor claims.
The Proposal, if approved by a majority of Creditors holding two thirds of the value and greater than 50 per cent. in number, would permit Pumptown to remain in possession and control of its property, carry on its business, retain employees and other service providers and restructure its operations. The Proposal, if so approved, would be binding on all Creditors. Subject to HSBC (at its absolute discretion) being satisfied with the terms of the Proposal, it has indicated that it is prepared to vote in favour of the Proposal.
If the Proposal, which offers to pay 9.554 per cent. of proven claims, is approved, a total payment will be made to all Creditors (including HSBC) of approximately C$210,000.
The Proposal, which was posted to Creditors on 12 June 2009, will be voted on at a meeting of Creditors to be convened on 24 June 2009.
The intercompany balances owed by Pumptown Quarry Inc. to PPA subsidiaries are not affected or otherwise compromised by the Proposal.
EFFECT ON PAN PACIFIC AGGREGATES PLC
Taken together with the £340,000 raised on 22 May 2009, the Proposal represents an opportunity for the Company's wholly-owned subsidiary, Pumptown, to quantify and resolve all historic Creditors, and allows the Company to move forward on a firm financial footing.
Due to the significant debt reduction that would be achieved by the Proposal, the Company will review the carrying value of Pumptown at 31 December 2008.
Managing Director, William Voaden, commented:
"In the last twelve months the Company has overcome many obstacles in relation to funding its operations. The Proposal to be put to Creditors will limit potential historic Creditor claims and reduce its liabilities in its subsidiary, Pumptown. The settlement with the Creditors would allow the Company to move forward."
"The Board can now focus on bringing the quarry back into production and to generating cashflow. There is demand in the area for our products and we are in discussions regarding several new aggregates contracts."
"There is a meeting on 29 June 2009 of the City of Abbotsford Council regarding the operational permit, for which the Board believes it has council officers' support. We are optimistic that the quarry will re-open shortly."
An announcement will be made as soon as further news is available.
On 12 June 2009, the last practicable date prior to the date of this announcement, the pounds sterling equivalent exchange rate was £1 = C$1.75.
For further information please see the Company's web site, www.panagg.com or contact:
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Pan Pacific Aggregates plc |
Tel: +44 (0) 20 7096 9580 |
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William Voaden |
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Dowgate Capital Advisers Ltd |
Tel: +44 (0) 20 7492 4777 |
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James Caithie / Aaron Smyth |
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VSA Capital Limited |
Tel: +44 (0) 20 7096 9589 |
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Paul Backhouse |
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Lothbury Financial Limited |
Tel: +44 (0) 20 7011 9411 |
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Michael Padley / Libby Moss |
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