Nadecor seeks arbitration in dispute with Benguet over Kingking
02/08/2010 | 05:06 PM
Nationwide Development Corp. (Nadecor), the estranged partner of listed miner Benguet Corp., wants to settle their dispute over the Kingking copper-gold mine in Compostela Valley via an arbitration process.
Under the scheme, a panel of independent arbitrators nominated by the parties will resolve the disagreement under a strict structure, avoiding delays and potentially preventing a protracted battle in court.
"Essentially, we're asking these arbitrators to divorce us without going to the courts," Nadecor financial consultant Raymond Ricafort said in an interview on Monday.
"What we're doing is legally taking them out of the operating agreement because there is clear evidence [Benguet] is no longer qualified especially after the Environment department said it had failed to fulfill its obligations under the work programs for the past 12 years," he added.
Benguet told the Philippine Stock Exchange on Monday it received the arbitration notice from Nadecor on February 5. "Benguet has referred the matter to its legal counsel for appropriate action," Benguet Assistant Corporate Secretary Reynaldo P. Mendoza said.
Ricafort said Nadecor had nominated its arbitrator and was just waiting for Benguet to nominate its own. The twin arbitrators, who will not be affiliated with either firm, will then nominate a third mediator to complete the panel, he said.
The panel will determine if damages should be awarded depending on pleas filed by the parties during the arbitration process, Ricafort said.
Falling short
The government ordered Benguet last January 15 to give up its rights over the Kingking copper-gold mine, saying it had fallen short of its commitment to develop the property.
The Environment department ordered the country's oldest miner to turn over the rights to Nadecor, saying it was dissatisfied with Benguet's efforts to complete the mineral exploration activities in the contract area.
Ricafort said Benguet had stopped being financially capable as a mining contractor given its negative equity.
"Their cash level is below P80 million, not even enough to do one project like Kingking. Benguet also has the Sta. Cruz nickel project [in Zambales province] and Batong Buhay mines [in Kalinga province], but there's no capital to back up those programs," he pointed out.
Benguet and Nadecor, which both claim rights to the Kingking mine, resumed their quarrel late last year, with each having signed a deal with separate third parties to finance the operations of the mine.
Nadecor has signed an operating deal with Rusell Mining and Minerals, Inc. for the Kingking mine, while Benguet has partnered with Chinese miner MinMetals International (HK), Ltd. to finance the project.
Nadecor earlier said it would raise $1.3 billion to start commercial operations. On October 20, Nadecor submitted to the Environment department an amended exploration work program, committing to spend $43.5 million to complete the feasibility study.
Last month, the PSE and Securities and Exchange Commission suspended the trading of Benguet shares after the miner failed to disclose default notices from creditors. The company has about P1.5 billion in debts.
Benguet has offered various creditors to pay a fifth of its P1.56-billion principal debt in cash, saying a settlement would benefit all parties.
The creditors have yet to agree to the offer, while trustee Philippine National Bank has issued the company a default notice on its debt. Norman P. Aquino, GMANews.TV
Under the scheme, a panel of independent arbitrators nominated by the parties will resolve the disagreement under a strict structure, avoiding delays and potentially preventing a protracted battle in court.
"Essentially, we're asking these arbitrators to divorce us without going to the courts," Nadecor financial consultant Raymond Ricafort said in an interview on Monday.
"What we're doing is legally taking them out of the operating agreement because there is clear evidence [Benguet] is no longer qualified especially after the Environment department said it had failed to fulfill its obligations under the work programs for the past 12 years," he added.
Benguet told the Philippine Stock Exchange on Monday it received the arbitration notice from Nadecor on February 5. "Benguet has referred the matter to its legal counsel for appropriate action," Benguet Assistant Corporate Secretary Reynaldo P. Mendoza said.
Ricafort said Nadecor had nominated its arbitrator and was just waiting for Benguet to nominate its own. The twin arbitrators, who will not be affiliated with either firm, will then nominate a third mediator to complete the panel, he said.
The panel will determine if damages should be awarded depending on pleas filed by the parties during the arbitration process, Ricafort said.
Falling short
The government ordered Benguet last January 15 to give up its rights over the Kingking copper-gold mine, saying it had fallen short of its commitment to develop the property.
The Environment department ordered the country's oldest miner to turn over the rights to Nadecor, saying it was dissatisfied with Benguet's efforts to complete the mineral exploration activities in the contract area.
Ricafort said Benguet had stopped being financially capable as a mining contractor given its negative equity.
"Their cash level is below P80 million, not even enough to do one project like Kingking. Benguet also has the Sta. Cruz nickel project [in Zambales province] and Batong Buhay mines [in Kalinga province], but there's no capital to back up those programs," he pointed out.
Benguet and Nadecor, which both claim rights to the Kingking mine, resumed their quarrel late last year, with each having signed a deal with separate third parties to finance the operations of the mine.
Nadecor has signed an operating deal with Rusell Mining and Minerals, Inc. for the Kingking mine, while Benguet has partnered with Chinese miner MinMetals International (HK), Ltd. to finance the project.
Nadecor earlier said it would raise $1.3 billion to start commercial operations. On October 20, Nadecor submitted to the Environment department an amended exploration work program, committing to spend $43.5 million to complete the feasibility study.
Last month, the PSE and Securities and Exchange Commission suspended the trading of Benguet shares after the miner failed to disclose default notices from creditors. The company has about P1.5 billion in debts.
Benguet has offered various creditors to pay a fifth of its P1.56-billion principal debt in cash, saying a settlement would benefit all parties.
The creditors have yet to agree to the offer, while trustee Philippine National Bank has issued the company a default notice on its debt. Norman P. Aquino, GMANews.TV
