Uranium miner Paladin Energy says it has started arbitration proceedings against its Chinese joint venture partner over complications with its plans to sell a stake in its Langer Heinrich mine.
Uranium miner Paladin Energy says it has started arbitration proceedings against its Chinese joint venture partner over complications with plans to sell a stake in the Langer Heinrich mine.
Perth-based Paladin said China National Nuclear Corporation’s request for the uranium miner to determine the fair market value of its 75 per cent stake in Langer Heinrich earlier this month was dependent on CNNC establishing that an ‘event of default’ had occurred under the joint venture agreement.
“The company disputes that an event of default has occurred and so disputes the validity of the notice received from CNNC,” Paladin said.
“The company has therefore resolved to commence arbitration proceedings against CNNC to seek orders and declarations accordingly.
“Disputes under the Langer Heinrich Mine Shareholders Agreement are subject to the laws of Western Australia, and must be referred to arbitration before the Singapore International Arbitration Centre.”
Paladin was hoping CNNC would acquire a 24 per cent stake in its Langer Heinrich interest for $US190 million, with the funds to be used to meet a $US212 million repayment obligation for 2017 convertible bonds, which has a looming deadline of April 30.
In January, Paladin announced a proposal to restructure its balance sheet by converting some debt into equity, extending the maturity date of the remaining amount, and undertaking a capital raising, after plans to sell the Langer Heinrich stake to CNNC looked bleak.
“Paladin will seek to extend existing standstill arrangements with creditors in order to afford time to pursue the proceedings and to ensure that the company has adequate funding,” Paladin said today.
“In the event the potential CNNC option is proven to be valid, it is unlikely that the company can implement the restructure proposal.
“CNNC’s actions are disappointing given the support the restructure proposal has received to date, CNNC’s failure to proceed with the acquisition of an additional 24 per cent stake in Langer Heinrich when it was offered to them last year, and CNNC’s repeated refusal to fund the working capital requirements of (the mine).
“As a result, CNNC has put at risk the interests of Paladin’s stakeholders.”
Paladin sold a 25 per cent stake in Langer Heinrich to CNNC for $US190 million in 2014, and would have retained a 51 per cent interest in the mine if the sale was to go ahead.
Paladin shares have been suspended from trade since March 8, at 10.5 cents a share.
