Revival chance for Wiluna Mining

Creditors for Wiluna Mining have approved a formal agreement between the company and its creditors to avoid the gold play and its subsidiaries winding up.

FTI Consulting's Michael Ryan, Kathryn Warwick, Daniel Woodhouse and Ian Francis were appointed as joint and several voluntary administrators of Wiluna Mining and associated companies in July last year.

In the administrators’ recent report to creditors, it was recommended that creditors vote in favour of the deed of company arrangement (DOCA) at their second meeting.

Wiluna Mining today announced on the ASX that creditors have approved the DOCA, which included creating a creditors trust fund with about $1.8 million to be immediately used for claims of unsecured creditors, a new loan of $6.67 million to build infrastructure at its project, and a cash sweep capped at $39 million.

The administrators also found Wiluna had a debt of $36.8 million plus interest to its secured creditor Mercuria.

According to the administrators’ report to creditors, the DOCA was a critical aspect of the sale of recapitalisation process of Wiluna.

The administrators said the DOCA was designed to maximise the group of companies’ chance of survival, providing creditors with a greater return instead of liquidating the companies, and facilitating a creditors’ trust deed.

“The deed administrators will use reasonable endeavours to cause WMC to issue new shares sufficient to raise an amount anticipated to be in the order of $A75 million on or before 31 December 2024,” the report said.

In their report, the administrators said preliminary investigations indicated the Wiluna companies were likely insolvent from at least April 30, 2022 and remained so until they were appointed.

“Our investigations also indicate there may be transactions and director breach claims which a liquidator could pursue and may result in recoveries for the benefit of creditors,” they said.

The administrators expect the trustees to transfer $1.8 million to the creditors trust to be distributed to beneficiaries, for a return of about five cents in the dollar for participating creditors, with further distributions up to $39 million to be made as necessary.

“Once all conditions precedent are met or waived, the companies will return to solvency under the control of the new directors and the creditors’ trust is able to continue after DOCA effectuation, if required,” the administrators said in the report.