THE British takeover of Namibia’s Ongopolo copper mining group yesterday received the green light from the High Court in Windhoek.
In a brief hearing before Acting Judge Louis Botes, the court approved a proposed scheme in which a British-registered company, Weatherly International, will take control of the Ongopolo group. The formality of the High Court giving the go-ahead follows a meeting of creditors of the Ongopolo group in Windhoek on Wednesday last week.All the creditors who attended that meeting voted unanimously to accept the proposed scheme in which Weatherly International will acquire a controlling stake in Ongopolo Mining and Processing, which is the holding company of the Ongopolo group.SECOND TIMEWith yesterday’s proceedings before Acting Judge Botes, the High Court has for the second time in a little over six years had to sanction an arrangement aimed at extending a lifeline to the mainstay of Namibia’s copper mining industry.In March 2000, the court gave its stamp of approval to a takeover scheme in which the then newly formed Ongopolo Mining and Processing took control of the financially stricken Tsumeb Corporation Limited, which had by then stopped operations at its mines at Kombat and Otjihase and its copper smelter at Tsumeb for two years while the company hovered at death’s door.Six years and four months down the line, Ongopolo has now been at the receiving end of the same procedure.This time, the taking over is being done by Weatherly International, a British company that itself has no track record of success in the copper-mining industry, and whose plan for taking control of Ongopolo is premised on a proposal to issue new shares in Weatherly on the London Stock Exchange in order to raise the cash needed to take over Ongopolo.Weatherly has promised Ongopolo’s ordinary creditors – these are the ones who had the opportunity to vote on the takeover scheme last week – that they will receive all the money that Ongopolo owes them.It will, however, take five years for their claims against Ongopolo to be settled in full, they have been informed.Weatherly has promised that it would provide N$120 million to settle these debts of Ongopolo.It would further pump N$150 million into Ongopolo to keep the company up and running in the meantime.BUY-OUTThe other side of the transaction, according to Weatherly, is that it would acquire a 97 per cent interest in Ongopolo Mining and Processing – a buy-out that would see control of one of the main pillars of the Namibian mining industry pass from Namibian hands to a new, London-based owner.According to documentation filed with the High Court, Ongopolo’s creditors have been informed that exploration and mine development activities have been some of the main reasons for the financial distress that brought Ongopolo to the brink of bankruptcy in late April, when Weatherly took over the management of the severely cash-strapped company as an interim measure to keep it operating.Extensive exploration and mine development, which saw the reopening of the Matchless Mine west of Windhoek and the development of a new mine at Asis Far West close to Kombat, cost more than was anticipated and left Ongopolo in a cash crunch, the creditors have been informed.In addition to that, the company has also been hit by the effects of price hedging, in which it sold future copper production at prices that turned out to be below the copper price that prevailed at the time of the actual delivery of the copper.This resulted in the company losing out on earnings that it could have received at a time when the international copper price had been heading for all-time record highs.CASH CRISISBy late April, when Weatherly concluded a deal with Ongopolo and its largest creditors, such as Standard Bank Namibia, Bank Windhoek, the Government Institutions Pension Fund, and Government, that led to an interim management takeover by Weatherly, Ongopolo’s liabilities totalled more than N$881 million.With assets totalling N$631 million, the company’s debts exceeded its assets to the tune of N$249,7 million, creditors have been informed.In the Ongopolo group’s last audited financial year, which ran to the end of June 2005, the group had suffered a loss of N$195,8 million, according to financial statements filed with the High Court.In the same year, the company’s eight directors earned a combined N$4,9 million in directors’ fees and managerial payments, the financial statements also reflect.The previous year, the Ongopolo group had lost N$67,1 million, while the directors had earned a combined N$4,2 million, the same audited statements show.Ongopolo was in “a severe cash crisis” by the time that Weatherly took over the management, creditors have been informed according to documents also filed with the court.”In fact, but for the concern over a repetition of the distressful situation of 1998-2000 and the drastic impact on socio-economic conditions in both the Tsumeb and Kombat areas, serious consideration was given to seeking one or more Provisional Liquidation Order(s),” it has further been revealed to the Ongopolo creditors.While Ongopolo was losing money, Weatherly International itself also had red ink on its balance sheets to deal with.According to its financial statements for 2005, the company suffered an operating loss of 800 991 British pounds (about N$10,6 million) in its 2005 financial year.That followed on an operating loss of 54 637 British pounds (about N$725 000) in 2004.The company has been raising the money that it intended to use for the Ongopolo takeover through issuing shares on the London Stock Exchange’s Alternative Investment Market (AIM).It has also reached an agreement with major Ongopolo creditors in terms of which some of the mining group’s debts with these creditors would be swapped for shares in Weatherly.According to a regulatory announcement that Weatherly has filed with AIM in this respect, this debt-for-equity swap would see Bank Windhoek emerge as the second largest shareholder in Weatherly, with a 10,24 per cent stake in the company, while the GIPF would, with a 4,15 per cent stake, be the second largest Namibian shareholder in the company.The formality of the High Court giving the go-ahead follows a meeting of creditors of the Ongopolo group in Windhoek on Wednesday last week.All the creditors who attended that meeting voted unanimously to accept the proposed scheme in which Weatherly International will acquire a controlling stake in Ongopolo Mining and Processing, which is the holding company of the Ongopolo group.SECOND TIME With yesterday’s proceedings before Acting Judge Botes, the High Court has for the second time in a little over six years had to sanction an arrangement aimed at extending a lifeline to the mainstay of Namibia’s copper mining industry.In March 2000, the court gave its stamp of approval to a takeover scheme in which the then newly formed Ongopolo Mining and Processing took control of the financially stricken Tsumeb Corporation Limited, which had by then stopped operations at its mines at Kombat and Otjihase and its copper smelter at Tsumeb for two years while the company hovered at death’s door.Six years and four months down the line, Ongopolo has now been at the receiving end of the same procedure.This time, the taking over is being done by Weatherly International, a British company that itself has no track record of success in the copper-mining industry, and whose plan for taking control of Ongopolo is premised on a proposal to issue new shares in Weatherly on the London Stock Exchange in order to raise the cash needed to take over Ongopolo.Weatherly has promised Ongopolo’s ordinary creditors – these are the ones who had the opportunity to vote on the takeover scheme last week – that they will receive all the money that Ongopolo owes them.It will, however, take five years for their claims against Ongopolo to be settled in full, they have been informed.Weatherly has promised that it would provide N$120 million to settle these debts of Ongopolo.It would further pump N$150 million into Ongopolo to keep the company up and running in the meantime.BUY-OUT The other side of the transaction, according to Weatherly, is that it would acquire a 97 per cent interest in Ongopolo Mining and Processing – a buy-out that would see control of one of the main pillars of the Namibian mining industry pass from Namibian hands to a new, London-based owner.According to documentation filed with the High Court, Ongopolo’s creditors have been informed that exploration and mine development activities have been some of the main reasons for the financial distress that brought Ongopolo to the brink of bankruptcy in late April, when Weatherly took over the management of the severely cash-strapped company as an interim measure to keep it operating.Extensive exploration and mine development, which saw the reopening of the Matchless Mine west of Windhoek and the development of a new mine at Asis Far West close to Kombat, cost more than was anticipated and left Ongopolo in a cash crunch, the creditors have been informed.In addition to that, the company has also been hit by the effects of price hedging, in which it sold future copper production at prices that turned out to be below the copper price that prevailed at the time of the actual delivery of the copper.This resulted in the company losing out on earnings that it could have received at a time when the international copper price had been heading for all-time record highs.CASH CRISIS By late April, when Weatherly concluded a deal with Ongopolo and its largest creditors, such as Standard Bank Namibia, Bank Windhoek, the Government Institutions Pension Fund, and Government, that led to an interim management takeover by Weatherly, Ongopolo’s liabilities totalled more than N$881 million.With assets totalling N$631 million, the company’s debts exceeded its assets to the tune of N$249,7 million, creditors have been informed.In the Ongopolo group’s last audited financial year, which ran to the end of June 2005, the group had suffered a loss of N$195,8 million, according to financial statements filed with the High Court.In the same year, the company’s eight directors earned a combined N$4,9 million in directors’ fees and managerial payments, the financial statements also reflect.The previous year, the Ongopolo group had lost N$67,1 million, while the directors had earned a combined N$4,2 million, the same audited statements show.Ongopolo was in “a severe cash crisis” by the time that Weatherly took over the management, creditors have been informed according to documents also filed with the court.”In fact, but for the concern over a repetition of the distressful situation of 1998-2000 and the drastic impact on socio-economic conditions in both the Tsumeb and Kombat areas, serious consideration was given to seeking one or more Provisional Liquidation Order(s),” it has further been revealed to the Ongopolo creditors.While Ongopolo was losing money, Weatherly International itself also had red ink on its balance sheets to deal with.According to its financial statements for 2005, the company suffered an operating loss of 800 991 British pounds (about N$10,6 million) in its 2005 financial year.That followed on an operating loss of 54 637 British pounds (about N$725 000) in 2004.The company has been raising the money that it intended to use for the Ongopolo takeover through issuing shares on the London Stock Exchange’s Alternative Investment Market (AIM).It has also reached an agreement with major Ongopolo creditors in terms of which some of the mining group’s debts with these creditors would be swapped for shares in Weatherly.According to a regulatory announcement that Weatherly has filed with AIM in this respect, this debt-for-equity swap would see Bank Windhoek emerge as the second largest shareholder in Weatherly, with a 10,24 per cent stake in the company, while the GIPF would, with a 4,15 per cent stake, be the second largest Namibian shareholder in the company.
