Johannesburg: Rockwell Diamonds Inc. has provided an update to the interim liquidation order against three subsidiaries of the company issued by a judge in Kimberley, South Africa, on March 23.
The interim orders, which have yet to be confirmed in a final hearing, include Rockwell Resources RSA (Pty) Ltd (Rockwell RSA), HC van Wyk Diamonds Ltd (HC van Wyk) and Saxendrift Mine (Pty) Ltd (Saxendrift). Interim liquidators have been appointed by the Master of the High Court, in accordance with requisitions by the major creditors. However, in view of further filings by the company, the interim liquidators will not take control of the three companies, which remain in operation by company personnel. The Wouterspan plant is nearing completion, with ore being processed through lines 1 and 2 and commissioning of line 3 now complete, to be followed by the ramp-up in processing rate.
On March 31, the company filed a motion with the court in Kimberley on an urgent basis to bring the date forward to consider the merits of the liquidation case brought by C-Rock Mining on which an interim liquidation order was issued on March 23. The interim order was issued after a short hearing where none of the company’s rebuttal evidence was considered by the court. The date for the final hearing was originally scheduled for June 22, however based on an application for the matter to be brought forward on an urgent basis, a motion was set down for a hearing on April 12. The hearing, however, was postponed to April 19 due to the fact that the Kimberley High Court is currently in recess and the Acting Judge on duty on April 12 was conflicted and therefore recused herself.
The company has subsequently filed for business rescue. The effect of a business rescue filing is that any liquidation order is automatically stayed. If successful in its application for business rescue, a business rescue practitioner will be appointed to work with company management to restructure the affairs of the company, seeking input and consent from creditors and well as considering strategic alternatives. The business rescue regime does not have a directly analogous structure in Canadian restructuring practice, and is primarily aimed at enabling a company to continue trading on a solvent basis after conclusion of the business rescue process.
In view of the fact that 96% of the dollar value of company creditors support the company’s plans, the company now believes that this support should be a significant factor in likely restructuring options. In particular, the business plan comprised the provision of a $8M in loan capital, completing the Wouterspan plant with such proceeds, a focus on cost reduction, efficiency improvements, the sale of certain redundant assets, the pay down of all creditors under ZAR50,000, and the purchase of all recent plant and mine supplies on a cash only basis. The implementation of this business plan is well advanced despite the frustrating intervention by C-Rock Mining.
The remaining task is to complete the commissioning and ramp-up the production rate of the processing plant at Wouterspan and relocate the Holsloot plant to Stofdraai (the northern edge of Wouterspan).
The company remains persuaded that its case for dismissal of the liquidation application is sound, and after a full hearing it believes it should prevail and C-Rock Mining’s actions will be shown to be spurious and without foundation.