DENVER, CO--(MARKET WIRE)--Mar 10, 2009 -- Apex Silver Mines Limited (Other OTC:APXSQ.PK) (the "Company") reported today that on March 4, 2009, the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") entered an order confirming the Company's Joint Plan of Reorganization (the "Plan"). As previously reported, the Company and its wholly owned subsidiary, Apex Silver Mines Corporation ("ASMC") filed a voluntary joint petition on January 12, 2009, for relief under Chapter 11 of the United States Bankruptcy Code with the Bankruptcy Court (Case Number 09-10182). The Company expects the Plan to be effective on or about March 24, 2009 when a series of transactions contemplated by the Plan, including the sale of the San Cristóbal mine, are completed.
Pursuant to the Plan, the Company will sell to Sumitomo Corporation ("Sumitomo") the Company's remaining direct and indirect interests in the San Cristóbal mine, including its 65% interest in Minera San Cristóbal, for a cash purchase price of $27.5 million, plus $2.5 million in expense reimbursements and the assumption of certain liabilities, pursuant to the Purchase and Sale Agreement dated January 12, 2009 (the "Purchase Agreement") among ASMC, certain other wholly owned subsidiaries of the Company, Sumitomo and one of Sumitomo's wholly owned subsidiaries. In addition, under the terms of the Purchase Agreement and the Plan, the Company will be released from liabilities associated with the San Cristóbal mine, including its guarantee of San Cristóbal's indebtedness. The Company presently anticipates that the Purchase Agreement will be consummated on or about March 24, 2009 in conjunction with, and as a condition to, the Company's emergence from bankruptcy pursuant to the Plan.
As a condition to the closing of the Purchase Agreement, ASMC will enter into a Management Services Agreement with Sumitomo (the "Management Agreement") under which it will provide certain management services to the San Cristóbal mine following consummation of the Purchase Agreement and emergence from Chapter 11 proceedings. ASMC will receive an annual fee of approximately $6.0 million, and a potential annual incentive fee of $1.5 million. The Management Agreement will have an initial term of twelve months and thereafter may be terminated by the Company with twelve months prior notice or by Sumitomo with six months prior notice. If terminated by Sumitomo, ASMC will be entitled to a $1.0 million termination fee.
Under the Plan, Golden Minerals Company, a new Delaware corporation, will hold the Company's assets upon emergence, and the Company will be liquidated in accordance with Cayman Islands law. The current equity holders of the Company will receive no recovery under the Plan and the ordinary shares of Apex Silver Mines Limited will be cancelled through the liquidation process.
Under the Plan holders of the Company's outstanding $290 million of 4.0% and 2.875% Convertible Senior Subordinated Notes due 2024 (collectively the "Subordinated Notes") will be entitled to receive a pro rata distribution of (i) common stock of Golden Minerals Company, and (ii) approximately $45 million in cash plus any other cash or cash equivalents held by the Company in excess of $15 million (plus a reserve for certain projected reorganization expenses), and the Subordinated Notes will be cancelled. Other unsecured creditors will receive cash payments for their claims, up to a maximum recovery of $10,000 per claim, or a pro rata distribution of common stock of Golden Minerals Company. Approximately three million shares of common stock of Golden Minerals Company will be issued to holders of the Subordinated Notes and other unsecured creditors under the Plan.
In addition to managing the San Cristóbal mine as described above, the business strategy of Golden Minerals Company will focus on the advancement of exploration activities on certain properties within a broad portfolio of 45 exploration properties in South America and Mexico. Two of these properties are in intermediate to advanced stages of exploration: the El Quevar silver project in Argentina and the Zacatecas silver and base metals project in Mexico. Golden Minerals Company will also seek to leverage the experience and skills of the management team by performing mine services, including feasibility studies and project development strategies; engineering, construction and procurement management; environmental permitting and corporate social responsibility support; technical support; and operations management. In addition, Golden Minerals Company will actively pursue growth through strategic opportunities, including acquisitions, joint ventures and asset consolidations that can bring synergy to existing assets and leverage the strengths of the management team.
The common stock of Golden Minerals Company is expected to commence trading over-the-counter (OTC) when the Plan becomes effective following the Company's emergence from bankruptcy on or about March 24, 2009. The Company expects that Golden Minerals Company will pursue a listing on a U.S. national securities exchange and the Toronto Stock Exchange. Golden Minerals Company will be the successor to the Company for purposes of reporting under the U.S. securities laws.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, including statements regarding the future effectiveness of the Company's plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code; the timing of the Company's emergence from Chapter 11 and the sale of the San Cristóbal mine to Sumitomo; the continued management of the San Cristóbal mine by Golden Minerals Company, the potential initial trading markets for the common stock of the Company's successor, Golden Minerals Company and the Company's intention that Golden Minerals Company pursue listing of its common stock on a U.S. national securities exchange and the Toronto Stock Exchange; and the expected components of Golden Mineral Company's business strategy. These statements are subject to risks and uncertainties, including whether the closing conditions for the sale of the San Cristóbal mine will be met, the ability of Golden Minerals Company to meet the listing standards for any securities exchange on which it seeks listing, financial market conditions and the ability of Golden Minerals Company to raise capital during 2009 on acceptable terms or at all. The Company assumes no obligation to update this information. Additional risks relating to the Company may be found in the Company's periodic and current reports filed with the Commission. |
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