Paladin Energy enters administration

03 July 2017

Paladin Energy Ltd has today appointed administrators after it was unable to agree a delay to the repayment of $277 million it owes Electricité de France (EDF). The administrators will continue to operate the company on a business-as-usual basis until further notice.

Langer Heinrich (Image: Paladin)

Western Australia-based Paladin in February announced plans for a balance sheet restructuring to enable it to meet debts due in April, after plans to sell a 24% stake in the Langer Heinrich uranium mine in Namibia to China's CNNC Overseas Uranium Holdings failed to progress. The sale of a 30% stake in the Manyingee project in Western Australia to Avira Energy Ltd (formerly MGT Resources), announced at the same time as the CNNC sale in July 2016, also failed to complete.

CNNC, which already owns a 25% joint venture equity stake in the Namibian project, subsequently began a process that could lead to it exercising an option to acquire all of Paladin's share of Langer Heinrich. This led to the proposal in May of an alternative restructuring plan by Paladin, as the original plan had assumed the company would retain an ongoing interest in its Namibian flagship project.

Paladin is due to pay EDF $277 million by 10 July under a long-term supply agreement signed in 2012. The company said it had approached EDF to grant a "standstill" agreement, which would allow time for the alternative restructure proposal to be implemented. Although terms had been negotiated they had not been signed.

"EDF has now informed Paladin that it is not prepared to enter into a standstill agreement and requires payment of the amount when due on 10 July 2017," Paladin said today.

Paladin on 27 June announced it had secured support for its alternative restructure proposal from over 75% of the holders of 2017 convertible bonds, passing the threshold needed to implement the proposal. Those bondholders have agreed to so-called forbearance arrangements under which they would not accelerate or enforce their claims against Paladin until 30 September. Today, the company announced that 88% of the holders of its 2020 convertible bonds had also agreed to similar forbearance arrangements.

An international investment bank is due to deliver an expert determination of the value of Paladin's interest in Langer Heinrich on 20 July, after which CNNC will have 30 days to decide whether to exercise its option to acquire Paladin's share of the project.

The administrators appointed today by Paladin's board are Matthew Woods, Hayden White and Gayle Dickerson, all of KPMG, who will immediately undertake a financial and operational assessment of Paladin Energy Ltd and related companies Paladin Finance Pty Ltd and Paladin Energy Minerals NL. Paladin said its management and directors "remain committed" to working with the administrators to restructure and recapitalise the company.

Paladin purchased Langer Heinrich in 2002, with production beginning from the open pit mine in late 2006. The mine produced a total of 1903.5 tU last year. The company's 85% interest in the Kayelekera uranium mine in Malawi, under care and maintenance since 2014, is held by Paladin (Africa) Ltd.

Researched and written
by World Nuclear News