[miningmx.com] — FIRST Uranium’s chairman, Peter Surgey, has taken on
one of the company’s most outspoken shareholder critics over the proposed sale of
the struggling gold and uranium miner’s key assets.
This was the first time that First Uranium publicly responded to the views of the
significant number of shareholders who vowed to oppose the sale of Mine Waste
Solutions and Ezulwini for a collective $405m. These proceeds are to be used primarily
for the payment of company debt.
For now, equity holders are expected to receive no more than a collective $26.6m, to
be distributed at around $0.11 per share.
In a letter to shareholders that was published on Wednesday, Surgey said outspoken
critic Nicholas Betsky, Head of Equities at Russia’s Olma Investments, had it wrong to
think shareholders would be better off if the company declared bankruptcy rather than
accepting the current deals on the table.
Betsky told Miningmx in April: “The money we’re getting is ludicrous. We
stand a better chance through bankruptcy than with these offers. A liquidation
process will at least be transparent.’
“We strongly disagree,’ said Surgey. “In all bankruptcy proceedings shareholders rank
behind all secured and unsecured creditors and thus are typically the last in line to
receive any proceeds from liquidation.
“Allowing the company to go into bankruptcy is not in your best interest, as we expect
that should this occur, you will receive no recovery.’
Surgey said bankruptcy would result in the immediate loss of mining rights in
Ezulwini, which would accordingly extinguish much of the mine’s value and have an
impact on the value of Mine Waste Solutions.
“As is commonplace in liquidation sales, liquidators are rarely able to extract fair
market value from the sale of assets in liquidation,’ he said. “In addition, from the
liquidation proceeds received, all costs of liquidation will need to be deducted before
any proceeds are paid to creditors and then to shareholders, if any proceeds remain.
“It is important that you vote regardless of the number of shares you own, in light of
the threat of Olma Investments to control the vote through the shares it influences.’
Betsky earlier told Miningmx he represented an investor grouping which
collectively held around 17% of First Uranium’s 238m shares. A Canadian official of a
financial services firm told Miningmx that he and other minority shareholders,
representing 10 million shares, would also vote against the deals.
The sale of Ezulwini requires a 66.6% approval rate from non-related party
shareholders, with Mine Waste Solutions needing 50%. Voting takes place on June
13.
