Moolman agrees to AF Copper debt deal

Brian Benza
Staff Writer | Friday May 15, 2009 00:00

The mining contractor is currently owed over P60 million by struggling African Copper. Zambia Copper has since agreed to take over the debt, along with the operations of the Mowana Mine, and is likely to bring in its own contractors.

In a joint statement, Zambia Copper and African Copper said, as part of the debt acquisition, all existing agreements between African Copper and Moolman have been terminated, including the mining contract in relation to African Copper's Mowana Mine.

'ZCI and African Copper have, on May 11, 2009, jointly entered into a binding debt assignment agreement with African Copper's mining contractor Moolman Mining Botswana (Pty) Limited ('Moolman') pursuant to which Moolman assigned its P60 million plus VAT (approximately US$8 million at an exchange rate of US$1/7.5 Pula) outstanding debt (the 'Debt') to ZCI at a price equal to 50 percent of the face value of the Debt ('the debt acquisition'), read the statement.The financial package agreement with Zambia Copper comes after African Copper shareholders voted against a similar offer by Natasa Mining Limited at an Extraordinary General Meeting of African Copper last week.

Under the agreement, a $10-million bridging loan facility will be provided to African Copper to satisfy all repayment obligations owing to Natasa Mining. The bridging facility will also assist the miner to make interim payments to its bondholders and key trade creditors in the amount of 50 percent of the total cash amounts being offered to them under the terms of the financing package.

The bridging loan will be made available in two tranches and will see Tranche A make $5-million available immediately for the purpose of repaying indebtedness owing to Natasa for professional fees and other authorised expenditure.Tranche A will, from the date of any drawdown of monies under Tranch B, bear a 12 percent interest.Tranch B will see a further $5-million availed following the execution of compromise agreements with the bondholders and certain large trade creditors.

The funds from this tranche will be made available for the purpose of making interim payments to bondholders and certain creditors and will bear 12 percent interest a year.

The financing package will return some $8,8-million to both bondholders and trade creditors and allow bondholders to retain a proportion of their bonds, giving an aggregate cash and bond offer of about $11,3-million. At the completion of the financing package, shareholders will retain a 15,14 percent equity interest in African Copper.

African Copper, which fell victim to the commodity price crash and went into care and maintenance early this year, has been the target of a hotly disputed takeover bid between Natasa Mining and Zambia Copper.