Below is the weblink to an interview which Ms Kent gave to a reporter of Business Edge magazine, a couple of years ago. It makes an interesting read (especially in light of the postings of Optimusprime on this Blog yesterday). Enjoy!
http://www.businessedge.ca/article.cfm/newsID/13340.cfm
1 comment:
I posted this on SH:
>What was the most important lesson from the Royal Oak bankruptcy?
"When we got into financial trouble and the price of metal (gold) dropped below $300 (US) an ounce, we should have not taken on the senior secured debt. We should have filed the company into CCAA with a lot of money in the bank, shut the operation down, taken our unsecured noteholders out of New York and converted them into equity and waited them out. The problem is that, to a certain extent, I'm an optimist. The No. 1 mistake we made was taking that senior secured debt and the second mistake was who we took it from. If we'd taken it from a bank, they would not have wanted the operation, so they would have settled into some sort of insolvency proceeding and worked it out." - Peggy Kent
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Is this what Kent plans on doing with Century??<
bob1013, thanks for your out of the box post. I think the current share price is reflecting that Century is now bankrupt in all but name and is in the process of restructuring itself. May be CMM took the initiative here so that they could remain in control of this process to the extent possible. Here are some thoughts on what I think is their game plan:
-shut down the lamaque mine and put it on care and maintenance to stem the cash outflow. Clearly this brings to a halt any further extensions of credit from their vendors. But Century will also stop any further interest and principal payments on the existing negative working capital balance and long term debt to IQ, while negotiating to have it restructured. Some options for resolution could be conversion of the debt to equity in the company, or a one year moratorium on payments until their cash flow situation improves. Thanks to their San Juan mine in Peru which has a sub $400 per oz operating cost it is a realistic possibility for Century to become cash flow positive even with Lamaque remaining shutdown.
-a few scenarios for resolving this financial crunch:
Plan A: Close on the Fortis debt financing, which will allow for the restart of the Lamaque mine.
Plan B:Keep the lamaque mine on care and maintenance until the ability for juniors to raise financing via the equity markets improves in say one to two years time. In the interim the cash flows from the San Juan mine in Peru would keep the company alive and as a going concern.
Plan C: Declare bankruptcy and let the courts resolve the situation. This is clearly the least desireable outcome for current shareholders and a last resort. Hopefully this may not be in the best interests of creditors either and will remain a remote possibility.
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