Cabral Resources Limited (Administrators Appointed)( Cabral )

Transcription

1 DRAFT Cabral Resources Limited (Administrators Appointed)( Cabral ) Second meeting of creditors 14 January 2015

2 Agenda Formalities Voting Purpose of the meeting Administrators Report to creditors Administrators remuneration Vote on the Company s future Liquidators remuneration Committee of Inspection Questions 2

3 Formalities Open meeting Administrator Chairman: Corporations Regulation (1) Introductions: Barry Kogan (Administrator) Damien Pasfield (Senior Manager) Michael Bogue (Director) Quorum: Corporations Regulation (2) Attendance register Time and place convenient: Corporations Regulation Proofs of debt and proxies 3

4 Formalities (cont.) Voting on voices unless poll demanded: Corporations Regulation Poll can be demanded by: Chairperson; or 2 persons present and entitled to vote; or Creditors representing at least 10% of claims When a poll is conducted, a resolution is passed if: more than half the creditors (in number) vote in favour of the resolution; and more than half the creditors (in value) vote in favor of the resolution If there is a deadlock, the Chairperson may use their casting vote 4

5 Purpose of Meeting Convened under Section 439A of the Corporations Act to: report to creditors on the Company s business, property, affairs and financial circumstances set out the Administrators opinion on the courses of action available to the Company vote on the Company s future: return Company to its Directors; or execute a Deed of Company Arrangement ( DOCA ); or enter into liquidation; or meeting be adjourned for up to 45 business days Consider and (if thought fit) approve the Administrators and Liquidators remuneration Consider the appointment of a Committee of Inspection 5

6 Report to creditors - background Listed iron ore explorer with a tenement portfolio in Bahia, Brazil Incorporated in July 1994 and initially listed on ASX in June 1995 Acts as a holding company with investments in: Subsidiaries with interests in over 100 iron ore tenements in Brazil; and A joint venture with China Railway Materials Commercial Corporation Group Provided extensive funding (c.$20 million) to subsidiaries in relation to exploration activities and securing tenements Expected future funding in excess of $10 million required to progress projects to commercial scale mining stage Attempts to raise capital failed to provide sufficient funding to Cabral to continue to fund the operations of its subsidiaries, ultimately leading to our appointment Causes of failure: Difficulties in securing funding; and No commercialized operations that generated an income stream 6

7 Report to creditors organisational structure Cabral Resources Limited (Administrators Appointed) ACN China Railway Materials Commercial Corporation Group (through subsidiary) 100% 100% 100% 50% 50% Cabral Brazil Pty Limited (Administrators Appointed) ACN ( Cabral Brazil ) 100% Northern Yeelirrie Pty Limited ACN ( NY ) CRMSC (Australia) Pty Limited ACN ( the JV ) Cabral Mineração Ltda (incorporated in Brazil)) ( Mineração ) Cabral Metias Ltda (incorporated in Brazil) ( Metias ) Key: Group entity Non-group entity Legal owner of Brumado Complex and Sincorá Area Beneficial owner of Sincorá Area Under external administration tenements tenements Mining tenements Trust relationship for Sincorá tenements 7

8 Report to creditors financial performance Statement of Financial Performance Year Ended 30 June June June 2014 $m's $m's $m's Income Revenue Total revenue Expenses Operational expenses (2.07) (1.35) (1.20) Depreciation and amortisation (0.01) (0.04) (0.03) Impairment expense (0.88) Share of JV profit / (loss) (0.43) (0.40) (0.06) Total expenses (2.51) (1.79) (2.17) Operating profit / (loss) (1.78) (1.48) (2.04) Source: FY12, FY13 and FY14 management accounts 1 Relates to expenses historically capitalised (e.g. travel) Cabral traded at a loss throughout the period reviewed Revenue consists of interest on funds held in bank accounts and reimbursement of expenses from the JV under a cost sharing agreement Expenses relate to employees, occupancy expenses, general administrative expenses and travel for the Directors to visit the offices and tenements of the Brazilian subsidiaries 8

9 Report to creditors financial position Statement of Financial Position Assets 30 June 2012 $m's 30 June 2013 $m's 30 June 2014 $m's Cash at bank (incl term deposits) Bonds / trust funds Loans to subsidiaries Investments in subsidiaries - Cabral Brazil NY Cabral Brazil JV NY Other assets Total assets Liabilities Year ended Employees (0.22) (0.27) (0.28) Other liabilities (0.08) (0.12) (0.08) Total liabilities (0.30) (0.39) (0.36) Net assets Source: Management Accounts 1 Equity invested - $1.00 Over the period reviewed, Cabral s most significant liability was employee entitlements, with no secured creditors and minimal unsecured creditors Assets comprised cash (including term deposits), loans to and investments in subsidiaries (mainly Cabral Brazil), and an investment in the JV 9

10 Report as to Affairs ( RATA ) Summary of Financial Position and Directors' RATAs Assets $m's Cash at bank (incl term deposits and bonds) 0.14 Loans to subsidiaries - Cabral Brazil NY 0.15 Investments in subsidiaries - Cabral Brazil JV NY Other assets 0.09 Total assets Liabilities Employees (0.69) Unsecured creditors (0.18) Total liabilities (0.87) Net assets Source: Management Accounts 1 Equity invested - $1.00 Loans to and investments in Cabral Brazil represent the most significant assets of Cabral at $18.57m and $1.25m, respectively Employee entitlements disclosed in Directors RATAs total approx. $688k. Administrators estimate outstanding liabilities to be approx. $708k, of which approx. $50k relates to preferential employee entitlements 10

11 Investigations Insolvent trading: Net assets: Positive net asset position throughout entire period reviewed (c. $20m) however, we note no impairment of loans in management accounts, despite impairment of underlying assets in the consolidated accounts. Cash flow: May have been cash flow insolvent since September Limited fresh liabilities incurred following this time Conclusions: Various defences available to Directors which makes claim for insolvent trading difficult to pursue Voidable transactions: Transactions totalling $45k identified which may constitute preferences (relatively small amounts to multiple parties) Breach of Directors duties: At this stage, no matters identified cause concern surrounding the discharge of the Directors duties and responsibilities under the Corporations Act 2001 Any potential recoveries are only available to a Liquidator Further investigations to be undertaken if Liquidator appointed 11

12 Sale process Initial discussions held with parties who had previously expressed (or likely to have) an interest in Cabral and/or its assets Advertised in the Australian Financial Review Engaged with over 40 parties to date, with formal EOIs received from 11 parties, and a number of non-binding indicative offers received Timetable: Expressions of Interest period: 8 December 2014 to 15 December 2014; Completion of stage 1 due diligence: 19 December 2014; Submission of non-binding first round offers: 19 December 2014; and Commencement of stage 2 due diligence for short-list bidders: 12 January 2015 Most of these offers contemplate a DOCA structure to acquire the listed shell Our overall objective is for final offers to be received and assessed in January 2015 and an agreement to be executed in February

13 Anticipated return to creditors Estimated return to creditors in a liquidation Particulars High $ Low $ Assets Cash at bank 37,052 37,052 Rental bond 77,532 - JV 250, ,000 Sale of business/assets Unknown Unknown Voidable transaction recoveries Unknown Unknown Less costs Staff, asset maintenance and operational costs (30,000) (50,000) Administrators' fees to 2 January 2015 (125,476) (125,476) Estimated Administrators' fees from 3 January to 14 January 2015 (30,000) (36,000) Estimated Liquidators' fees (70,000) (80,000) Legal and other professional costs (30,000) (50,000) Amount available for preferential creditors 79,108 - Employee entitlements (less non-priority claims from employees) (50,588) (50,588) Estimated return to preferential creditors % 0.00% Amount available for unsecured creditors 28,520 - Unsecured creditor claims (including non-priority claims from employees) 819, ,935 Estimated return to unsecured creditors 3.48% 0.00% Residual funds available to shareholders Nil Nil Source: McGrathNicol analysis High scenario: Sufficient funds to pay preferential employee entitlements in full, some funds for unsecured creditors and no funds for shareholders Low scenario: Insufficient funds to meet the costs of the administration/liquidation and no funds available for creditors (including preferential creditors) or shareholders The above analysis does not include recoveries from Cabral s business/assets as disclosure of preliminary views could jeopardise the sale outcome. Potential recoveries from voidable transactions are also excluded 13

14 Resolutions Administrators remuneration Resolution remuneration incurred from 1 December 2014 to 2 January 2015 I now put the following resolution to the meeting: That the remuneration of the Administrators for the period from 1 December 2014 to 2 January 2015, calculated on hours spent at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $125, (excluding GST), is hereby approved for payment. 14

15 Resolutions Administrators remuneration (cont.) Resolution estimated remuneration incurred from 3 January 2015 to 14 January 2015 I now put the following resolution to the meeting: That the Administrators remuneration for the period from 3 January 2015 to 14 January 2015 shall be a sum equal to the time cost spent by the Administrators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $35, (exclusive of GST). Creditors acknowledge that if actual costs incurred are below the amount approved, the Administrators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Administrators will seek further approval from creditors. The Administrators are approved to draw their remuneration as and when it is incurred from funds under their control. 15

16 Resolutions Administrators remuneration for Cabral Brazil Cabral is the overwhelming largest creditor of Cabral Brazil (only one other creditor for $124) Accordingly, we consider it useful that the creditors of Cabral consider passing a resolution noting their support for the following resolutions passed by creditors of Cabral Brazil: That the remuneration of the Administrators for the period from 1 December 2014 to 2 January 2015, calculated on hours spent at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $24, (excluding GST), is hereby approved for payment. and That the Administrators remuneration for the period from 3 January 2015 to 14 January 2015 shall be a sum equal to the time cost spent by the Administrators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $9, (exclusive of GST). Creditors acknowledge that if actual costs incurred are below the amount approved, the Administrators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Administrators will seek further approval from creditors. The Administrators are approved to draw their remuneration as and when it is incurred from funds under their control. 16

17 Resolutions Administrators remuneration for Cabral Brazil Resolution regarding remuneration from 1 December 2014 to 14 January 2015 for Cabral Brazil I now put the following resolution to the meeting: That the creditors of Cabral are supportive of the remuneration resolutions passed by creditors of Cabral Brazil, and payment of these amounts as and when incurred from funds on hand. 17

18 Resolutions Cabral Brazil s future We also request that the creditors of Cabral consider the following resolutions put to creditors of Cabral Brazil: That the second meeting of creditors be adjourned for a period of up to 45 business days Resolution adjourn Cabral Brazil meeting for up to 45 business days I now put the following resolution to the meeting: That the creditors of Cabral are supportive of the adjournment resolutions passed by creditors of Cabral Brazil. 18

19 Vote on Cabral s future: Administrators recommendations Administration to end As Cabral is insolvent, control of the company should not be returned to the Directors DOCA No final/binding DOCA has been proposed, therefore not recommended Cabral to be wound up As there is no DOCA and Cabral is insolvent, in the event that creditors wish to immediately resolve the future of the company, the Administrators recommendation is that creditors vote in favour of the company being placed into liquidation Adjourn meeting for up to 45 business days Various bidders are proposing to transact via a DOCA structure In order to leave this option open for creditors (which may ultimately increase the proceeds received and therefore the return to creditors), we recommend that creditors resolve to adjourn the meeting for a period of up to 45 business days 19

20 Vote on Cabral s future resolution Adjourn meeting for up to 45 business days I now put the following resolution to the meeting: That the second meeting of creditors be adjourned for a period of up to 45 business days Liquidation I now put the following resolution to the meeting: That Cabral be Wound Up and Barry Kogan and Joseph Hayes be appointed Joint and Several Liquidators 20

21 Resolutions Liquidators remuneration I now put the following resolution to the meeting: That the remuneration of the Liquidators, for the period of the liquidation, shall be a sum equal to the time cost spent by the Liquidators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $75, (exclusive of GST). Creditors acknowledge that if actual costs incurred are below the amount approved, the Liquidators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Liquidators will seek further approval from creditors. The Liquidators are approved to draw their remuneration as and when it is incurred from funds under their control. 21

22 Resolutions Liquidators remuneration for Cabral Brazil Cabral is the overwhelming largest creditor of Cabral Brazil (only one other creditor for $124) Accordingly, we request that the creditors of Cabral consider the following resolutions put to creditors of Cabral Brazil: That the remuneration of the Liquidators, for the period of the liquidation, shall be a sum equal to the time cost spent by the Liquidators, their partners and their staff, calculated at the rates detailed in the Schedule of Remuneration Methods and Hourly Rates provided to creditors, in the amount of $20,370 (exclusive of GST). Creditors acknowledge that if actual costs incurred are below the amount approved, the Liquidators are only authorised to draw the amount incurred. Creditors also acknowledge that if actual costs incurred exceed the amount approved, the Liquidators will seek further approval from creditors. The Liquidators are approved to draw their remuneration as and when it is incurred from funds under their control. Resolution regarding Liquidators remuneration for Cabral Brazil I now put the following resolution to the meeting: That the creditors Cabral are supportive of these resolutions put to creditors of Cabral Brazil, and payment of these amount as and when incurred from funds on hand. 22

23 Resolutions Committee of Inspection I now put the following resolution to the meeting: That a committee of inspection be formed, with the following to be members: representing representing representing representing representing 23

24 Q & A

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