02 January 2008

Latest Update on Lafayette

Carlos Dominguez of Lafayette Philippines Inc. has been oft-quoted in press releases as saying: “this temporary legal process we are going through is actually a blessing for the Rapu Rapu project because it will resolve the financial issues the local management team has been urging LML to address.”

Somehow, the truth has an uncanny way of surfacing out, like dead fishes. No matter how much you try to scoop 'em & bury 'em as quickly and stealthily as you can, at one point, Murphy's Law will catch up on you. When that happens, you won't just have to contend with a respectable fish kill, but also big investor pull-out, creditors coming out of the woodwork, activists breathing down your neck... You know what they say about the weather these days in Albay: when it rains, it pours.

Here's an excerpt from the "Full Statement of Lafayette Mining Ltd. to the Administrators Ferrier Hodgson", dated 20 December 2007, but released today 020108. (From http://saverapurapu.blogspot.com/)

"6. On 17 December 2007, Rapu Rapu Minerals Inc ("RRMI"), an associate of Lafayette, received a default notice from its mining contractor Leighton Contractor (Philippines) Inc ("Leighton"). Lafayette is a co-guarantor of the payment of money due under the mining contract with Leighton and while there was a cure period for default provided under the terms of the contract, Lafayette could not be certain that either RRMI or Lafayette would be in a position to settle this claim by Leighton at the expiry of the cure period, given the delayed nature and inherent uncertainty in the Bank Group's processes.

7. By 17 December 2007, it was also evident that Lafayette's cash reserves would be insufficient to meet corporate expenses beyond 31 December 2007. While the Bank Group had in the past provided the necessary financial support to Lafayette to continue to meet its obligations, (including as recently as 11 December 2007 when a further US$300,000 was made available to the Company to fund expenses expected to be incurred in December 2007) the availability of this continued support was uncertain, creating further doubt for Directors about the ability of the Company to continue to meet it obligations.

8. Given all of the above, the Board of Lafayette met on 18 December 2007, and being of the view that they no longer had reasonable grounds to believe that the Company could meet its obligations as and when they fell due resolved to voluntarily appoint Messrs Sutton and McCluskey of Ferrier Hodgson to the role of Administrator. In making this appointment, the Board expected that the Administration process would allow all options for either the sale of the Project or a restructure and recapitalization of the Lafayette group to be fully explored."

So Lafayette is not bankcrupt.
  • It just won't be able to pay Leighton just yet.
  • It just couldn't make ends meet by 31 December 2007.
  • Its parent company in Australia just won't be able to meet its obligations.
  • It's now just being ran by the banks.
I get the feeling that "it is a hoax!" will soon be joined by "we are not bankcrupt!" as the new company "it-mantra". But no matter how you make yourself hoarse shouting it, somehow the picture of the boy who cried wolf just couldn't be shooed away from the mind.

I wonder what the Lafayette people will say about this interesting piece of news. I wonder what text messages will I be getting this time.

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