Gascoyne administrators propose recapitalisation

The administrators of Gascoyne Resources have recommended creditors support a deed of company arrangement (DOCA) that includes a capital raising targeting up to $80 million and a potential full return to unsecured creditors.

West Perth-based Gascoyne entered into voluntary administration last June, appointing FTI Consulting senior directors Michael Ryan, Kathryn Warwick and Ian Francis to manage the company.

The proposed DOCA and recapitalisation plan are being formulated with the intention of Gascoyne continuing to operate under its current group structure, and for unsecured creditors to receive a possible return of up to 100 cents in the dollar via a combination of debt repayment and equity entitlement.

The recapitalisation plan will involve either a share placement or rights issue, targeting between $70 million and $80 million, with Canaccord Genuity appointed as lead manager and bookrunner.

FTI expects the secured debt owed to Gascoyne’s financiers to be repaid in full, in part from the equity raising.

Gascoyne owed $32.7 million to its mining contractor, NRW Holdings, at the time it entered into administration, which was fully impaired in NRW’s 2019 financial accounts.

The contractor today said it would restructure its secured debt and release all claims made against Gascoyne in respect of the pre-administration debt, subject to completion of the recapitalisation plan and repayment of debt.

NRW will receive 5 per cent of the total amount raised by Gascoyne, as well as a debt to equity conversion of $12 million calculated at the issue price under the rights issue.

Gascoyne will repay any remaining amount owed in the form of quarterly instalments, beginning in January next year.

Each instalment amount will be based on an agreed percentage of revenue achieved by Gascoyne, with regards to the number of ounces of gold sold during that quarter.

Gascoyne’s administrators said the company had achieved a significant operational turnaround over the past 12 months, with gold production reaching more than 6,000 ounces for the fifth consecutive month.

That amount reflects higher grades accessed from Gascoyne’s Gilbey’s Main Zone at the Dalgaranga mine, FTI said.

Investec remains financial adviser to the administrators and Herbert Smith Freehills as legal adviser.