TSX-listed Rockwell Diamonds' interim liquidators will not take control of the three subsidiary companies, which remain in operation by the company’s personnel.The Orange River diamond miner issued a statement regarding the interim liquidation order against three subsidiaries issued by a judge in Kimberley during March 2017.
The interim orders, which have yet to be confirmed in a final hearing, include Rockwell Diamond subsidiaries Rockwell Resources RSA, HC van Wyk Diamonds and Saxendrift Mine.
Interim liquidators have been appointed by the Master of the High Court, in accordance with requisitions by the major creditors.
For now, the interim liquidators have decided to leave Rockwell Diamonds in control of its subsidiaries.
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 31 March 2017 Rockwell Diamonds filed a motion with the court in Kimberley, South Africa, 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 23 March 2017.
The interim order was issued after a short hearing where none of Rockwell Diamond’s rebuttal evidence was considered by the court.
The date for the final hearing was originally scheduled for 22 June 2017, 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 12 April 2017.
The hearing, however, was postponed to 19 April 2017 due to the fact that the Kimberley High Court is currently in recess and the acting Judge on duty on 12 April 2017 was conflicted and therefore recused herself.
Rockwell Diamonds files for business rescue
Rockwell Diamonds 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 Rockwell Diamonds’ 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 Rockwell Diamonds' 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 US$8 million 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 R50 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 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.
Feature image credit: Rockwell Diamonds