The administrators and the banks had taken their restructuring proposal to the ASIC and the Takovers panel for the sole purpose of getting a green light to bypass existing shareholders.
I have written to ASIC (although my submission was too late) and to the administrators (who have as yet not responded) and suggested to them that its would be possible to come up with a capital structure that is equitable in satisfying the interests of all parties. I wrote the following:
“I believe all shareholders understand that creditors have a priority
call on Pasminco's assets and that creditors are entitled to recover their
loans plus interest plus reasonable costs. But if Pasminco is re-floated
then there is a chance that additional wealth may be generated beyond
current expectations. If that were to happen, then that additional wealth,
over and above creditor's entitlements, belongs to existing shareholders.
Now I would like to suggest an equity structure to satisfy the above
requirement. My suggestion is that you convert existing debt to preference
shares with an appropriate face value to satisfy the banks, and with
appropriate special conditions. One of those conditions should be to allow
Pasminco to re purchase the preference shares at face value. Existing shares
should be converted to options. These options would also have special
conditions but importantly they would be convertible to ordinary shares upon
the payment of some dollars. Both, the preference shares and the options
should be listed on the ASX.
The principle behind the above equity structure would be to allow
the recovery of outstanding debt through the conversion of options to
ordinary shares. That is, the equity raised by exercising the options would
be used by Pasminco to repurchase and then cancel the preference shares. The
options could have a nominal expiry date (which could be arbitrarily set and
could be periodically revised) simply to give option holders an incentive to
convert to shares if market conditions are favourable.
I believe the above structure would be equitable to all
participants. Creditors would have maximum flexibility of recovering their
loans and existing shareholders would reap the benefit if metal prices were
to significantly increase over coming years.”
I believe the danger now is that existing shareholders will be seriously short changed. If you are an aggrieved shareholder like I am than I suggest you voice your concerns by speaking to the Administrators, writing to ASIC and writing to newspapers. The point is we must not let the greed of the creditors drive the restructure when there is an equitable solution.
PAS
pasminco limited