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I have not seen any report from Mr Rice, I think Sleep was just speculating, hence the "sounds like" at the beginning of his post.
One more bit of information to add, PN is not planning on any "provisions" (money) to deal with the lawsuit filed against them. Very odd. Here is a quote and link to their (PN) note to shareholders from Sept. 3rd I suspect they are hearing from angry shareholders about all the legal bills they are racking up. Their lead attorney gets $495 an hour.
Here is the quote, you can follow the link to view the whole thing.
"On August 27, 2010, a new action was launched against Nevada Star by Western Utah Copper Company. This action is very similar to the counterclaims made in response to our original lawsuit. We believe this new action is without merit and we do not anticipate the need to make any provisions to deal with this issue. We will continue to work towards driving shareholder value in our Milford based assets."
http://www.purenickel.com/s/NewsReleases.asp?ReportID=417258
I can add a little bit to this conversation, NS has subpoenaed someone named Lee Rice of Great American Minerals Exp, I think this may be the same Lee Rice who is CEO of CGFIA Its doc 225 on Pacer
Mudcat, Send an email to CPRKSA@Gmail.com and Frank or I will discuss it with you.
only one seller left at .0016
The restructuring website has been updated
http://www.copperkingwesternutahminingrestructure.com/Releases%20and%20Filings.htm
Doc 215 off pacer I like this part
"Moreover, the Debtor recently entered into a modification of its supply contract with Massey that will provide significant monthly income to the estate."
Proposed Local Counsel for Chapter 11 Debtor and Debtor-in-Possession
IN THE UNITED STATES BANKRUPTCY COURT
DISTRICT OF UTAH
In re:
Western Utah Copper Company,
Debtor and Debtor-in-Possession.
Case No. 10-29159-WTT
Chief Judge William T. Thurman
Chapter 11
DEBTOR’S OMNIBUS REPLY TO OPPOSITIONS TO DEBTOR’S MOTION FOR AN ORDER EXTENDING DEBTOR’S EXCLUSIVITY PERIODS TO FILE A PLAN OF REORGANIZATION AND OBTAIN ACCEPTANCE THEREOF
WESTERN UTAH COPPER COMPANY, the above-named Chapter 11 debtor and debtor in possession (the “Debtor”) hereby submits its reply to the oppositions filed by the Senior Secured Creditors and Nevada Star to the motion (the “Motion”) for an order extending the Debtor’s exclusivity periods to file a plan of reorganization and obtain acceptance thereof, for ninety (90) days, from September 15, 2010 to December 15, 2010,
1
Case 10-29159 Doc 215 Filed 09/02/10 Entered 09/02/10 17:02:30 Desc Main
Document Page 1 of 13
respectively, and from November 15, 2010 to February 14, 2011, respectively.
INTRODUCTION
The Senior Secured Creditors and Nevada Star seek to prevent the Debtor from maintaining its exclusivity periods to file a plan and obtain acceptances thereof, but neither party offers any actual reason, or any evidence, as to why the Debtor, which has demonstrated that it is capable of obtaining financing to reorganize its financial affairs, should not be afforded the exclusive opportunity to obtain Court approval of such financing and be in a position to propose a plan of reorganization in this case.
It is no secret that the centerpiece of this bankruptcy case is the Debtor’s efforts and ability to obtain post-petition financing, even over the objections of the Senior Secured Creditors and Nevada Star. The Debtor’s efforts to obtain post-petition financing, on a senior secured basis (for the most part), are supported by the Committee (which has objected to certain aspects of the Debtor’s DIP Financing, but which has expressed its overall support for the Debtor’s efforts to obtain post-petition financing). Indeed, the Committee has not opposed the Debtor’s Motion.
The Debtor has proposed a solution in this case that does not involve a liquidation of the Debtor’s assets. Such a liquidation of the Debtor’s assets, all parties seem to agree, would provide no recovery to general unsecured creditors No other party has offered any solution, plan or idea that does not involve a scenario where general unsecured creditors receive nothing. There is currently pending before the Court the Debtor’s Financing Motion, which will place the Debtor in a position to be able to propose a confirmable plan of reorganization, which will provide creditors of this case a far greater recovery than that which could ever be achieved by way of a liquidation (which is essentially the extent of the Senior Secured Creditors’ and Nevada Star’s “creative thinking”). The Debtor does not need the consent of either the Senior Secured Creditors nor Nevada Star to propose and confirm a
Document Page 2 of 13
plan of reorganization. Nor is the Debtor interested in liquidating its assets. Not extending exclusivity would have the effect of creating the potential for needless plan litigation. The Debtor has demonstrated, by way of its efforts to obtain post-petition financing, its negotiations with the Committee, Junior Secured Lenders, and other constituencies, including the largest secured creditor in this case in terms of principal loan amount owing (Massey), that there are prospects for a successful reorganization in this case. For these, and the reasons discussed below, “cause” exists to extend the Debtor’s exclusivity periods.
ARGUMENT
1. The Senior Secured Creditors and Nevada Star argue that the size and complexity of the case favors denial of the Motion. This argument makes no sense considering the following: The Debtor is the owner of extremely valuable mining properties in Milford, Utah. The amount of secured debt in this case is in the tens of millions of dollars. The Senior Secured Creditors have objected to every motion and/or request made by the Debtor. Nevada Star, a disputed creditor of the Debtor, has asserted that it owns some of the Debtor’s properties, and therefore, the Debtor cannot mine its own properties. Nevada Star has also asserted that prior to any reorganization taking place, the litigation with Nevada Star must be concluded. The Debtor and CKMC are inseparably intertwined, as they share books and records, management, and debt. The Debtor’s parent corporation, CKMC, is apparently the subject of SEC and IRS investigations. The Debtor is seeking post-petition financing for up to $18 million, and such financing request is heavily contested. CKMC’s case may involve an equity security holders committee. These facts are not facts that suggest a simple, straightforward, Chapter 11 bankruptcy case. This case is complex, with many moving parts and various constituencies with their own interests and motivations. This case is a complex Chapter 11 case.
2. The Senior Secured Creditors and Nevada Star also argue that the necessity 3
Document Page 3 of 13
for sufficient time to permit the Debtor to negotiate a plan of reorganization favors denial of the Motion. This argument fails to take into account the centerpiece of this case, which is the postpetition financing which the Debtor seeks Court authority to obtain. While the Senior Secured Creditors argue that the Debtor should have proposed a plan by now, that argument completely ignores the fact that the Debtor’s request for postpetition financing is pending before this Court, and is a vital aspect of the successful reorganization of the Debtor. If the Debtor files a plan now, without approval of its proposed financing, the Debtor’s plan would be subject to vigorous opposition as being not feasible. With financing, the Debtor can propose a confirmable plan that meets all of the requirements of Section 1129. Importantly, neither the Senior Secured Creditors nor Nevada Star can block the Debtor’s ability to confirm a plan because the Debtor can use the cramdown provisions of Section 1129 and also obtain the approval of other creditor classes, including other secured creditor classes. It is simply premature to file a plan now, which plan would be based on a significant assumption regarding the form and amount of financing that would be approved by the Court. Filing a plan now would not be prudent, or possible, given the overarching, unresolved matter, of postpetition financing. An additional 90 days will allow the Debtor to see its Financing Motion through to a final ruling. Only after such a ruling would the Debtor be able to propose a plan in this case.
3. The Senior Secured Creditors argue that that Debtor has not made good faith progress to reorganization. The Debtor has exhibited good faith progress towards reorganization in this case. The Debtor has made every effort to promptly secure post-petition financing and the Debtor has in fact been able to obtain a proposal for such financing. The Debtor also believes that it has allies in this case that will support the Debtor’s efforts to obtain post-petition financing and reorganization – the Committee, Junior Secured Creditors, and Massey (the single largest secured creditor in this case). The Debtor
4
Document Page 4 of 13
has negotiated with its creditors, and the Debtor has made progress with its creditors. The Senior Secured Creditors and Nevada Star are not the only constituencies in this case, and the Debtor has already pushed towards establishing a groundwork for a successful reorganization.
4. The Senior Secured Creditors argue that the Debtor is not paying its bills as they come due. This is the same constituency that objected to the Debtor’s request for financing to pay its employees and various other operational expenses. In any event, the Debtor recently obtained emergency financing to cover certain of its crucial expenses, and the Debtor’s motion for further approval of payment of various expense items is pending before the Court. Moreover, the Debtor recently entered into a modification of its supply contract with Massey that will provide significant monthly income to the estate.
5. The Senior Secured Creditors and Nevada Star argue that the Debtor has not demonstrated a reasonable prospect for filing a viable plan. The Debtor has a plan – in fact, it is the only party in this case that has actually demonstrated the ability to finance operations and create value in the estate. The Senior Secured Creditors and Nevada Star, of course, merely seek to liquidate the Debtor’s assets. In such a scenario, general unsecured creditors would receive nothing. The Debtor, on the other hand, presents the only solution in this case which would provide a recovery to general unsecured creditors. That solution is based substantially upon the Debtor’s Financing Motion, which is still pending before the Court. Until that Financing Motion is determined it is entirely premature to conclude that the Debtor cannot reorganize.
6. Nevada Star and the Senior Secured Creditors argue that the Debtor has not made good faith progress towards reorganization and in support of its argument states that the Debtor’s proposed financing is not in the best interests of creditors. The Debtor disagrees, and the Financing Motion is pending before this Court. This is exactly why the
Document Page 5 of 13
Debtor’s exclusivity period should be extended – so that the Financing Motion can first be resolved. If the Financing Motion is resolved in the Debtor’s favor, then the Court will have found that the proposed financing is in the best interests of creditors.
7. The Debtor has made progress in negotiations with its creditors. The Senior Secured Creditors and Nevada Star seem to believe that they are the only creditors in this case. They seemingly have not read, or have decided to purposefully ignore, the declarations of Massey and Junior Secured Creditors in support of the Debtor’s efforts to obtain financing. Such constituencies will also support the Debtor’s reorganization, over the objection of the Senior Secured Creditors.
8. The Senior Secured Creditors admit that “this case has been pending for only three months”. They argue that the amount of time which has elapsed in this case does not affect the outcome of the Motion. However, the Debtor is still within its exclusivity period, and the Debtor’s Financing Motion is still pending. The Debtor could file a plan right now, and still retain its exclusivity period to obtain acceptance of its plan. But filing a plan now would not be prudent until the Financing Motion is resolved. The Debtor has no interest in proposing a plan now only to be forced to later amend the plan. Such actions would be impractical and expensive. This is why competing plans would make no sense at this time – because no other party has offered any alternative to liquidation. It is more prudent to extend the Debtor’s exclusivity periods so that any plan that is filed takes into account the outcome of the Financing Motion.
9. The Debtor is not seeking an extension of its exclusivity period to pressure creditors. The Debtor already has the support of major constituencies in this case. Indeed, only the Senior Secured Creditors, and disputed creditor Nevada Star, have objected to the Debtor’s Motion. Those objections can best be characterized as nuisance objections, given that, while such objectors argue that the Debtor’s exclusivity period should not be extended,
Document Page 6 of 13
they offer no solution or proposal, other than to argue that the Debtor’s assets should be liquidated.1 Such an outcome would only serve their interests, to the detriment of the remainder of the estate. The fact of the matter is that it is very difficult to propose a plan at this time, without any idea regarding the financing that is at issue before the Court.
10. Two significant unresolved contingencies exist in this case: First, the Financing Motion is now pending and unresolved, and its outcome will dictate, in large part, the path of this case. Second, there currently exists unresolved litigation between the Debtor and Nevada Star, in the form of a pending lawsuit that Nevada Star brought against the Debtor in 2009 in the United States District Court for the District of Utah (the “Mine Ownership Case”). Nevada Star has filed a motion to modify the automatic stay to transfer the Mine Ownership Case to this Court. Nevada Star alleges that it owns certain of the Debtor’s properties and that the Debtor “cannot propose a plan that includes mining the Debtor’s properties.” (See Nevada Star Relief From Stay Motion, Docket No. 43.) The Debtor completely disputes Nevada Star’s contentions that the Debtor is not the owner of the real property at issue in the Mine Ownership Case. Nevertheless, Nevada Star also states that “resolving the Mine Ownership Case is a condition precedent to resolving this bankruptcy case.” (See id.) Given the nature of the Mine Ownership Case, and the fact that it has not yet been resolved, the Debtor submits that terminating plan exclusivity now does not make sense, and that, compelling the Debtor to file a plan now would be unfair to the Debtor’s efforts to propose a workable plan. Even if the Debtor were to propose a plan taking into account this contingency, the difference in the positions of the parties to the Mine Ownership Case is so vast that creditors of the Debtor’s estate would likely be unable to intelligently vote on any such plan that attempted to account for such diametrically opposed
1 Indeed, Nevada Star has previously taken the position that a reorganization in this case cannot proceed until its litigation with the Debtor is resolved, yet now, for the purpose of defeating the Debtor’s Motion, Nevada Star argues that the time to file a plan is now.
Document Page 7 of 13
scenarios (one where the Debtor owns properties to mine, and another where the Debtor does not own properties to mine). Accordingly, the Debtor should be afforded the “first-shot” at filing a plan without being forced to expend resources defending against a competing plan, and/or prematurely filing a plan now prior to determining the outcome of the Financing Motion prior to the further progression of the Mine Ownership Case.
11. Nevada Star argues that “a plan must be filed in the near future if there is to be any chance of reorganization in this case.” This is the same party that argued that “resolving the Mine Ownership Case is a condition precedent to resolving this bankruptcy case.” Nevertheless, Nevada Star, in an effort to thwart the Debtor’s Motion, in complete ignorance of its prior representations, now argues that the time to file a plan is now. This makes no sense.
[color=red]12. Typical of Nevada Star, the Nevada Star opposition provides no evidence whatsoever. No declarations have been filed in support of the opposition, and no witnesses are offered. Yet, Nevada Star purports to provide its opinion regarding: (1) how to mine, (2) where to mine, (3) what type of financing to obtain, and (4) the merits of the type of financing that the Debtor has obtained. This is the same party that misrepresented to the Debtor its ownership of various land which it purported to transfer to the Debtor, which the Debtor later found out was never Nevada Star’s to transfer. A complaint has been filed in this Court against Nevada Star concerning these misrepresentations.
13. The misrepresentations continue – Nevada Star argues that “Second Secured Creditors . . . are simply not going to consent to millions or tens of millions [of dollars] of priming liens.” This is not true – many of the “Second Secured Creditors” have already supported the Debtor’s request for emergency interim financing. They have filed declarations in support of the Debtor’s interim financing request (only one Second Secured Lender filed a joinder to the opposition to the Debtor’s Financing Motion). Additionally,
Document Page 8 of 13
Massey, the largest secured creditor in this case in terms of actual principal loan amount, supports the Debtor’s priming loan. In any event, Nevada Star is a disputed unsecured creditor at best, with no allowed claim in this case – it cannot speak to the will of any of the secured creditors (except that, it is clear that Nevada Star and the Senior Secured Creditors have agreed to join forces to obstruct the Debtor’s attempts to reorganize).[/color]
14. Nevada Star does not even have an allowed claim in this case, and even if Nevada Star did have a claim, it would be a general unsecured claim. According to Nevada Star and the Senior Secured Creditors, there is no equity in the Debtor’s assets, and the Senior Secured Creditors are undersecured, meaning that in a liquidation scenario, general unsecured creditors (such as Nevada Star assuming its claim is allowed, and any deficiency claim held by the Senior Secured Creditors) would receive nothing. Thus, Nevada Star’s and the Senior Secured Creditors’ motivations have nothing to do with what is in the best interests of the Debtor’s estate – indeed the exact opposite is true. Nevada Star and the Senior Secured Creditors are only motivated to take the Debtor’s properties.
15. Nevada Star and the Senior Secured Creditors argue that “creditors will continue as hostages in this case” but that argument fails to take into account the following: (a) Senior Secured Creditors can file a relief from stay motion at any time to attempt to obtain their collateral, but they have not done so; (b) Nevada Star has obtained relief from stay to prosecute its litigation with the Debtor, so it is also not prohibited from exercising its rights; (c) neither the Committee, Junior Secured Creditors, nor Massey has opposed the Debtor’s Motion, and in fact are supporting the Debtor’s efforts to obtain financing (while the Committee and the Debtor have issues left to resolve concerning the Financing Motion, the Debtor submits that it is negotiating with the Committee in good faith).
16. The Debtor seeks to develop a comprehensive, consensual exit strategy without the interference of a competing plan that would detract from the Debtor’s
Document Page 9 of 13
reorganization efforts, and without the need to file a premature plan prior to resolving the Financing Motion. The Motion should be granted.
Dated: September 2, 2010
LEVENE, NEALE, BENDER, YOO & BRILL L.L.P.
By: /s/ Martin J. Brill
Martin J. Brill
Proposed Reorganization Counsel for
Chapter 11 Debtor
3 at .0016 2 at .0017 1 at .0018 then not till .008 lol
I believe he has been out of the country, but CPRKSA steering committee has been keeping in touch with him. We value his input.
You seem to be very well informed Thunder. Good post, thanks.
MD says there is no relation, Blum is a very common name in Canada,in fact if you google it you will see just how common. Harry is from the Eastern part and Wilf is from the West.
No relation, but Harry Blum does have an "interest" in CPRK. Not sure exactly what the "interest" is, but it is mentioned in NIC's filings as a potential conflict.
Good info Ally, if anyone is bored, you can go through NIC's filings here.
http://www.purenickel.com/s/FinancialStatements.asp
No relation Nate.
You would settle for only .02? lol
lol, I would today, I am averaged under .0008 so ya, I would settle for .02 today. (or tomorrow) lol
I think that .02 caused some folks to market sell quickly and thats why it dropped so quick, I was trying to sell myself. lol
Did anyone else just see that blip??? Zecco had it at .02, showed my position worth over 600K !!!!!!
Looks like it was a $480 trade that took it down at the bell. I am happy to see some continued volume, we went so long with just 1-5 million shares a day, good to see 25 mm Monday, then over 15 mm today. We are still very early in the process, I am sure we will have many more large % swings to come.
It is nice to see some "lively" discussion on this board to match the increase in volume and up over 46% today to boot. A great start to the week.
It is VERY good news indeed, if the BLM payments were not paid it would have been game, over same with the insurance, if it was not paid nobody could go on the property. 10K for maintaining the site/equipment is also money well spent. Hope for more good news to follow.
OK, again very slippery language, I still dont see that they are actually working with GE like you posted. But again, I dont want to bash, good luck with your investments guys.
"GE for crying out loud! They PR'd that they are working with a GIANT"
Richie, can you post the PR where they say they are actually working with GE?? I have not seen that. I have seen a slippery worded pump from Lebed that mentions GE, but he just says that GE is going to start doing their own nano business. (which will crush XDSL IMO)
Hey Guys, I am copy/pasting this post from FFF from the CPRKSA site
WE NEED YOUR HELP!!
Now that we have an EHC (Equity Holders Committee) approved, the next
step is to select the shareholders who will comprise the actual EHC
committee. We feel that it is critical that the members of this EHC
are up to speed on what is happening in this case and that they are
committed to maximizing shareholder value. It is important for you to
know that CPRKSA does not make the selections, that is done by the US
Trustee. However, CPRKSA can make recommendations. The CPRKSA
steering committee is concerned that the US Trustee may appoint
shareholders who have had no involvement in the formation of the EHC
and that have no idea what is going on in the bankruptcy proceedings.
We would like to have several members of the CPRKSA steering committee appointed to the EHC and are asking for your help to have this
happen. We want to have the following 3 members of the steering
committee appointed to the EHC:
Frank Firek
Chuck Dawson
Scott Harmer
Also, per the US Trustee, 2 valuable members of the steering committee
are not eligible to be on the EHC:
Lee Abbott - Because he was the CFO of WUCC prior to the reverse
merger with CPRK
Carol McCulley - Because she is also a land owner
However, Lee and Carol could be hired as advisors to the EHC.
***************************
In order to send a clear message to the US Trustee about who should be
on the EHC we are asking for your help.
Please send an email to CPRKSA@gmail.com with your desires on the
following 2 EHC items:
EHC Item #1. State "yes" or "no" to indicate your support for the
recommendation that Frank Firek, Chuck Dawson and Scott Harmer are
appointed to the EHC.
EHC Item #2. State "yes" or "no" to indicate your support for the
recommendation that Lee Abbott and Carol McCulley be hired by the EHC
as advisors.
Thank you for your support!
Frank Firek
Hi guys,
The kid as I call him from lebed.biz is doing a pump on this one again over the weekend. I am NOT a fan of this company to put it nicely, but if any of you guys are still in it, may be a chance Monday to cash out if you choose. I'm not trying to bash it, just a heads up.
Here is the disclaimer from the pump email
My firm Lebed Biz LLC has been compensated by a third-party (Wall Street Grand, LLC) $20,000 cash for a one-month XDSL investor relations contract. We were previously compensated by XDSL 1.85 million restricted shares, $105,000 cash and 175,000 warrants to purchase shares at $0.35 for past investor relations contracts which have since expired. We have sold our previously compensated restricted shares. We had previously received an additional 2.5 million restricted shares for an XDSL investor relations contract that was canceled and thoseshares were returned to the company.
Hey guys, thanks for all the appreciation shown on here. This is still going to be a long process, but we are committed to seeing it through. Someone posted a very good question on the CPRKSA board and I thought it important to share it and my response.
On Aug 28, 5:27 pm, Siroco <iskl...@gmail.com> wrote:
> I would like to thank the stirring committee for the great work so
> far.
> However, before voting on your proposal, I would like for you to
> define what does
> hiring Lee Abbott and Carol McCulley mean in practice?
My reply
Very fair question Siroco, first let me say that Carol and Lee have
done excellent
work for absolutely NO money. Lee especially has been key in making
this happen.
I am not sure exactly how it will be set up, but Carol will take a
dollar a year, and probably
Lee as well. We have not discussed this with the Trustee yet, so
dont know exactly how
it will have to be structured, but I can tell you that I think both
will actually save us money.
Just an example, if we need a document from the Beaver County
courthouse, it has to
be retrieved in person because their records are not online. Carol
can go get a copy for us
instead of having the lawyer send someone down for 200 bucks an hour
or whatever.
Another example, I hope you read the document Lee put together for our
presentation to the
Trustee, it took a LOT of research and many, MANY hours just to
write. We would have
had to pay a lawyer MANY thousands of dollars to produce it. Lee plans
to continue to assist
us like that thereby saving us (the shareholders) countless billable
hours from the attorney's.
We are hoping to get direct out of pocket expenses reimbursed, as
some travel, or actual fee's
etc that we have to pay. We ALL want the company to survive and thrive and
are putting in a LOT of
time and effort to make it happen. I hope this answers your question.
ChuckD
Good idea RDG, send me your email address.
Note to shareholders from CAM
A Short Note to Shareholders
Saturday, August 28, 2010
For those of you who are not part of the Shareholder Association, this is new information that is
of extreme importance.
The Company website for the reorganization is available at the following URL:
http://www.copperkingwesternutahminingrestructure.com
ALL of the filings from the Company and the answers and objections and declarations are listed.
I point this out since there is a new filing that everyone should see. This is Document # 185 and
it should give everyone a better idea as to why the Company could not secure the necessary
financing to avoid the current situation. Anyone who recalls the questions I was asked about
the Nevada Star suit against us for nonperformance will recall that I relayed the answer of the
general counsel at the time ?We feel the suit is without merit and we will vigorously defend it,
and may counter-claim due to the frivolous nature of the suit.?
This should show you some more of the details of what we faced during the year prior to our
Chapter 11 filing in May.
I would also like to point out that the Equity Holders Committee has been recognized by
the Trustee. This is a gigantic step forward for the group. The Company supports the
rights of this group and has taken part in several of their Sunday night conference calls.
Well, I said a ?short note? so that will do for now. I will continue to update all progress on a
regular basis. I believe that now that we are moving toward a solid Plan of Reorganization
(POR) we will have more news to report?..
While I am not using the phone number (617-633-2259) I am still available via email at
CAM@copperkingmining.com and I will return calls as soon as possible. There are many of you
who call and email me on a regular basis and I answer of return calls the same day.
Charles
Someone who most of y'all dont know has been working with us "behind the scenes" named Lee Abbott. Here is part of our presentation to the Trustee that helped get us approved. Lee gets most of the credit for actually putting this letter together that contains the crux of our argument. There are TONS of supporting Docs as well. The format got a little messed up when copy/pasted from word, but here it is.
Our share count has gone up a good bit since this was filed.
CPRKSA
Copper King Shareholders Association
Members of the Steering Committee:
Lee Abbott Chuck Dawson
Frank Firek Scott Harmer
David Wright
August 9, 2010
Ms. Laurie A. Cayton
Office of the U.S. Trustee
Department of Justice
405 South Main Street
Suite 300
Salt Lake City, Utah 84111
Re: Request for the appointment of an Official Equity Security Holders Committee to support the interests of public shareholders in the Chapter (Ch.) 11 Bankruptcy proceedings of Copper King Mining Corporation (Case Number: 10-30002-WTT), and Western Utah Copper Company (Case Number: 10-29159-WTT).
Dear Ms. Cayton:
My name is Lee Abbott. I am listed as an equity shareholder in Copper King Mining Corporation (CPRK); and its subsidiary, Western Utah Copper Company (WUCC). CPRK and WUCC are currently undergoing Ch. 11 Bankruptcy proceedings in the State of Utah.
On account of these proceedings, a group of CPRK shareholders have recently formed an Ad Hoc committee identified as the CPRK Shareholders Association (CPRKSA). CPRKSA is an ever growing group of individual investors seeking fair and just recovery of their investments. Membership grows daily and our investment interests now total more than 40% of all outstanding shares at this time.
For clarification, CPRKSA is not, at present, an official committee, nor is it represented by counsel. Members cannot be expected to adequately represent the legal rights possessed by individual shareholders since individual shareholders owe no fiduciary duty to any other shareholder, or to a class of shareholders. ((Beker Indus.Corp., 55 B.R. 945, 949 (Bankr. S.D.N.Y. 1985))
Yet as a group, CPRKSA shareholders respectfully request you, as Trustee, to appoint individuals from CPRKSA as an Official Equity Security Holders Committee for the purpose of representation in the aforementioned bankruptcy proceedings, pursuant to 11 U.S.C Section 1102 (a) of the Bankruptcy Code.
CPRKSA urges your support in this matter for the following reasons:
1. There is sound cause to believe the debtors? estate, as presented to the court, is indicative of conservative figures which do not reflect true market value of the assets in the current state of the economy. Debtors have focused on a portion of the assets held by the company and presented a valuation standard that severely understates the value of the stated assets. Should valuation reflect current standards, value could increase towards hundreds of millions of dollars in excess of what is reflected in the debtors schedules.
2. The burden of representation of management and/or the Debtor?s Board of Directors for the interests of equity holders may prove conflict of interest. Even if certain directors or managers hold substantial equity positions, a conflict exists to proper equity representation as they are subject to conflicting fiduciary duties to all stakeholders. Further, there is a reasonable expectation that the Debtors will favor the interests of significant creditor claims, as their relations are important to the Debtors for future business interactions. Also, an official creditor?s committee cannot be relied upon for equity representation, as the Creditor?s Committees owe their fiduciary duties to the secured and unsecured creditors, and as such, will most likely be working against the interests of equity holders. CPRKSA is distinctly concerned the Debtor and Creditors may negotiate an equity swap, or other agreement allowed by the bankruptcy code, resulting in windfall profit that would be diverted away from current equity holders. An official equity committee would give proper representation to equity holder?s interests, as an equity committee?s fiduciary duties will not be divided between stakeholders, but will only seek what is just and proper value given to equity?s interests.
An official committee charged with safeguarding the interests of the class it represents is one of the critical protections for creditors and shareholders provided in the Bankruptcy Code. Section1102(a)(2) of the Bankruptcy Code provides that, on request, the court may order the appointment of an official committee to represent the interests of equity security holders where "necessary to assure [their] adequate representation" in a reorganization case.11 U.S.C.?1102(a)(2).
Congress recognized that other parties, such as creditors, cannot be expected to adequately represent the interests of shareholders:
As public investors are likely to be junior or subordinated creditors or stockholders, it is essential for them to have legislative assurance that their interests will be protected. Such assurance should not be left to a plan of reorganization negotiated by a debtor in distress and senior or other institutional creditors who will have their own best interest to look after. [S. Rep. No. 989, 95th Cong., 2nd Sess. 10 (1978)] (emphasis added).
The legislative history indicates that Congress intended for official committees to ?be relied upon in cases in which the debtor proposes to affect several classes of debt or equity holders under the plan and in which they need representation. [H.R. Rep. No.595, 95th Cong.,1st Sess.401 (1977)]. In particular, Congress explained that official committees are to serve as "the primary negotiating bodies for the formulation of the plan of reorganization.? It is apparent from both the legislative history and Section 1103 of the Bankruptcy Code, however, that the function of committees is not limited to negotiating plans. Official committees, including equity committees, also represent creditors or equity security holders in all other aspects of the case, "provide supervision of the debtor," and ?execute an oversight function in the pursuit to protect constituents' interests." [In re Penn-Dixie Indus., Inc., 9 B.R. 941,944 (Bankr. S.D.N.Y. 1981)]. Thus, Congress recognized that in certain Ch. 11 cases, appointment of an official equity committee with wide-ranging powers and duties will be necessary in order for shareholders? interests to be adequately represented.
In the proceedings of cases 10-30002-WTT and 10-29159-WTT committees to represent both the Secured and Unsecured creditors have been formed so the interests of both of those classes of stakeholders are being represented. Shareholders deserve representation also.
3. Guidelines have been developed to determine whether an official committee is necessary to provide adequate representation for shareholders, which include the following:
A. debtor?s solvency;
B. number of shareholders;
C. complexity of the case; and
D. whether the cost of an additional committee (including financial cost and the cost of delay) would significantly outweigh the concern for adequate representation.
[In re Williams Communications Group, Inc., 281 B.R. 216, 220 (Bankr. S.D.N.Y. 2002); Albero v. Johns-Mansville Corp. In re Johns-Manville Corp., 68 B.R. 158, 159-60 (S.D.N.Y. 1986); In re Emons Indus., Inc., 50 B.R. 692, 694 (Bankr. S.D.N.Y. 1985)].
A.(1) While it is a fact that the Debtors in these cases have little or no cash flow, this situation has existed since the founding of the company. The Debtors are a start-up mining operation and the debts incurred to date have been incurred as a function of starting up a mining operation which has yet to reach what could be considered ?cash flow.? The test of insolvency in this case, as in other similar cases, is not a test of cash flow but a test of total liabilities versus total assets. The prevailing evidence shows that the assets far outweigh the liabilities in these cases.
The Debtors have declared that they do not believe the company to be hopelessly insolvent and are requesting the approval of DIP financing (See Declaration of John A Bryan Docket # ck 21 & Declaration of John A. Bryan Docket # ck 23 Pg 7 para. 16,). A major portion of the DIP financing is designated by the Debtors for the purpose of ?confirmation drilling,? metallurgical testing and mineral production. As the Debtor?s illustrate in in Docket # ck 23 beginning on page 14 production of minerals would produce cash flow especially with current metal prices.
A.(2) There are numerous reports available on the assets included in the Estate of the Debtors. The most credible asset reports, completed by top firms and recognized experts, testify to an incredibly high mineral content of the assets of the debtor. In addition, shareholders have obtained informal opinions from mining experts indicating that if the ?state of the art? mill, now mostly complete, were in production it would be worth approximately $60 Million.
The ability to process ore, extract the minerals from that ore and produce a market ready product such as copper, gold, and silver concentrates is critical to the successful operations contemplated by the Debtors. The existing mill is a major link in that process and enhances the value of the mineral holdings assets but the major assets of the Debtors are the mineral holdings, claims and leases.
As an equity security shareholder in CPRK, I understand the perceived necessity Mr. Bryan (current C.E.O.) felt to value the assets of the Debtors at what is essentially liquidation value. Mr. Bryan stated that ?my team and I have prepared a valuation model of the Debtor?s assets today, based on current factors (e.g., no operations and no ability to extract and efficiently process ore).? (Refer Docket # ck 23, Declaration of John A. Bryan Jr., Pg 4 Para. B. 8). This valuation raises several legitimate questions about the methods used to determine asset value and certainly runs contrary to the proposed valuations used by management pre-petition.
A large number of the shareholders who are members of CPRKSA are sophisticated investors. When members purchased shares, they knew the Company (Debtors) was not yet producing commercial quantities of Copper or other metals. Members bought shares based on the value of the underlying assets (i.e., the mineral holdings, and a ?state of the art mill? that was ?soon? entering production).
While it is true the Mill is currently not in ?production?, shareholders are of the opinion production failure is due to a lack of operating capital;rather than, ?the ore mining facility does not have the equipment or technical capacity at this time.? (e.g., J.A. Bryan, Docket #23, Pg5). In fact, mine and milling experts recognize any mill requires a ?dialing-in? process.
Additionally, the Debtors mill has produced copper concentrate, yet shareholders were told it was ?not economical? to produce concentrates when the mill was in production. (CPRK Press Release, May 3, 2010, Author: Marcus Southworth, President & CEO). John Bryan and Dave McMullin (Officer & Board Chairman) recently informed the CPRKSA Steering Committee that the mill was ?fired up? for testing and that it was in ?a lot better condition than we expected.? Tetra-Tek stated it was in ?excellent? shape. In the Declaration of Michael G. Nelson, Ph.D. (Docket # ck 26), the following statement was made in reference of the mill:
?Optimization of the operation of the flotation mill will require 6 to 8 months. During this time, the mining plan and ore blending schemes will be determined, flotation reagent schemes will be optimized, and the methods for removing moisture from concentrates and tailings will be finalized. Such a startup time is typical for flotation mills like this one. I have worked in such mills in the U.S., Australia, Chile, Mexico, and South Africa.? [Declaration of Michael G. Nelson, Ph.D., Docket Number 26, Pg 4, para 4. (Emphasis added)].
A.(3) NI 43-101 may not be the correct standard for the valuation of assets, designated by the Debtors post petition. National Instrument 43-101 Standards of Disclosure for Mineral Projects, is a reporting standard adopted by Canadian Securities Administrators for the basic purpose of investor protection. Investors who are contemplating investing in minerals projects need a standard upon which they can rely in making informed investment decisions. NI 43-101 was adopted in an effort set a clear standard upon which unsophisticated retail investors could depend. The intent of NI 43-101 is to minimize any instances of misrepresentation or investment fraud in the Canadian Securities industries. Because of the comparatively friendly mining securities laws in Canada, many small United States mining companies list their securities on the TSX-V stock exchange in Canada. Therefore, NI 43-101 has become a sort of de-facto standard for small United States mining companies when it comes to the governance of securities transactions and investors relations. However, the Debtors in this case are not involved in the issuance of new Canadian securities nor in the promotion of new securities of any kind. These Debtors are involved in a bankruptcy proceeding where the true market value of the assets of the Debtors is much more important than if those assets meet the standards of the Canadian Securities Administrators.
In bankruptcy proceedings there is ample reason to question the need for mineral assets to meet the high bar set in NI 43-101. In fact, a recent press release from the Canadian Securities Administrators indicates that Canadian Authorities are contemplating repealing and replacing NI 43-101. One of the reasons stated for the proposed repeal is ?the challenges the current mining disclosure rules pose? to the operations of market participants. (Exhibit A, attached)
Yet, in the Declaration of Mr. Bryan (Docket # ck23), NI 43-101 was identified as the required standard the mineral assets of the Debtors needed to meet to obtain any value. Failure to comply with the standard of ?Measured Resources?, as set in NI 43-101, does not in any way mean the mineral asset does not exist.
A.(4) Assets vs. Liabilities: Shareholders are unable to obtain critical information to enable an independent evaluation or valuation of the assets of the Debtors. Though I am a member of CPRKSA, shareholder, and a former officer of one of the Debtors (Western Utah Copper), I do not have access to the books and records of the company. Additionally, for the past three or four years I have obtained very limited access to the properties upon which, and in which, assets of the company are located. For the past several months the Debtors have denied shareholders unencumbered access to the properties. Permission is only granted under the strict supervision of guided, and guarded, tours.
However, CPRKSA posses convincing evidence of huge deposits of mineralization, and therefore asset value, throughout the properties controlled by the Debtors. CPRKSA has obtained hundreds of documents and volumes of reports, all of which are readily available upon request.
For the purposes of this letter, below are references to documents that have been introduced into the bankruptcy proceedings of the Debtors.
Summary of Schedules of Debtor Western Utah Copper
This 25 page document (Exhibit B, attached) indentifies claims and land holdings of the Debtor. The document lists 923 claims and leases, most of which are in the Beaver County mining districts of Beaver Lake, Rocky, and San Francisco. These claims constitute a large land position of approximately 66 Square Miles or 43,000 Acres (Map 1 - Exhibit C, attached). The holdings in these districts are not all of the holdings of the Debtors but they will suffice for the purposes of this letter.
Regarding assets of the Debtors, please refer the following documents on record in this bankruptcy proceeding: The Declaration of John Bryan (Docket # ck 23 mentioned earlier), Declaration of O. Jay Gatten (Docket # ck 27 - Exhibit D), Declaration of Michael G. Nelson, Ph.D. (Docket # ck 26 - Exhibit E), and Declaration of David Hartshorn (Docket # ck 25 - Exhibit F). For the most part, these statements focus upon small faction Debtors holdings.
References in these documents to the Hatch Report (see supplemental material) are numerous. The Hatch Report is a report prepared for the Debtors and delivered on April 8, 2008. The Hatch Company, based in Canada, is a worldwide supplier of technical and strategic services to the Mining, Metallurgical, Energy, and Infrastructure industries. The Report Hatch prepared for the Debtors was based on a report completed in 1998 by Mine Development Associates. The Hatch Report focuses on four mines (or deposits) and some on-property stockpiles. These four mines are: The Hidden Treasure, The OK, The Maria, and The Copper Ranch. The approximate locations of these mines are marked in blue on Map 6 (Exhibit C). These mines represent a small portion of the land holdings of the Debtor.
The Declaration of JA Bryan mentions the Bawana Mine (also shown in blue on Map 6 as a primary target). (Please note that the holdings maps, including Map 6 DO NOT include all of the mines or ?targets? within the holdings. For example, the Candy B, the Sunrise, the Old Hickory and the Valley are not identified on Map 1 or Map 6.
Declaration of O. Jay Gatten, points out that he is a ?licensed professional geologist? who owns North American Exploration and has 46 years of experience. He states that he is ?very familiar with the mineral resources on the properties owned or leased by CPRK Mining Corporation and Western Utah Copper Company.? Mr. Gatten goes on to say (bottom of page 3):
?My findings and conclusions, based upon my experience, research and evaluation, were and continue to be as follows:
There are large, high-grade copper resources on the WUCC properties. ... These deposits and resources were accurately measured with consistent results by three qualified companies. While this information does not meet current (NI 43-101) requirements, the data cannot be ignored.
The projections of Dr. Michael Nelson ... concluding that the Debtors have a highly profitable project are reasonable given the additional drilling noted above and the effective operation of the existing (CPRK) flotation mill.? (Page 4, paragraph c.)
?The Debtors control many thousands of acres of contiguous mining claims. This area hosts numerous occurrences of copper with precious metal content, there are at least 15 exploration targets that could be tested and developed to provide additional reserves and enhance the value of the Debtors? assets.? (Pg 4, para d. emphasis added)
Dr. Michael G. Nelson?s credentials portray impressive accomplishments. Dr. Nelson is a university professor (University of Utah) and a consultant with over 25 years of experience. He has been granted 7 patents and 7 of his new technologies have been commercialized. He is the author and co-author of 7 books, 30 peer-reviewed publications, and more than 20 other publications. He states that 2 of his patents are ?related to processes in flotation mills and may be relevant to operations of CPRK Mining Corporation.?
Dr. Nelson was a consultant to the Debtors from April 8, 2008 to June 26, 2009 and is familiar with the ore reserves and the operation of the mill. He states the following beginning at the bottom of page 3:
?The Debtors? properties currently have sufficient ore reserves for the flotation mill to process approximately 3,700 tons per day for at least 2 years.? (Emphasis added)
Beginning at the top of page 4 (para b):
?With this input, the flotation mills should produce an estimated $5 to $6 million of pre-tax revenues per month at steady state, based on copper at $2.81/lb., silver at $18.04/oz, and gold at $1040/oz.? [Current Prices (LME), as of August 6th for these metals are: Copper $3.35/lb., Silver $18.43, Gold $1195.40].
Paragraph 8(A), page 4:
?The mining rate and ore grades for the first two (2) years were based on the analysis in the Hatch report, PR H328548, rev I, p.48, dated April 8, 2008. That report shows a total of 2,505,395 tons of ore reserves, with an average grade of 1.173%.?
It is important to note that the Debtors have continued to drill, assess and assay ore bodies for the past three years. As far as I know, none of the data gathered as a result of that drilling is included in the Hatch Report.
Back to Dr. Nelson - Paragraph 8(B), bottom of page 4:
?I did not make an independent analysis of the drill data, nor of the mining plans that support the data in the Hatch report. However, I have reviewed the Hatch report in detail, and I am confident that it is correct, according to prevailing industry and regulatory standards. Moreover, Hatch is an industry leader in conducting independent verifications and analysis of mining-related projects and their reports are regularly relied on by experts and industry leaders.? (Emphasis added)
Here are a couple of important statements from the Declaration of Dr. Nelson, who is an expert in the design and operation of flotation mills (page 5, para e):
?I did review the detail and design bases for the mill, including the mass and water balances, the calculations for sizing equipment, and the design of the flow sheet. In my opinion, the design of the mill is sound, and is suitable for the ore types at WUCC. The mill is designed to be flexible, to allow processing of many ore types, with varying contents of copper oxides, copper sulfides, and magnetite.
The operating and shipping costs used in the analysis were provided to me by employees of WUCC, as were the criteria for smelting and refining contracts and charges. Again, these parameters are reasonable, based on my criteria for smelting and refining contracts and charges. These parameters are also reasonable, based on my experience with other similar projects.?
In summary, Dr. Nelson?s Declaration states that the mill is the correct mill, and that it will take some time to ?optimize? the operation of the mill but it should profitably process the ore in the Debtor?s holdings.
Dr. Nelson also made statements that are pertinent to the value of the assets. He stated that the mill should produce ?$5 to $6 million of pre-tax revenue per month at steady state.? He goes on to state that the parameters under which he arrived at the revenue numbers allowed for the operating and shipping costs and the criteria for smelting and refining contracts and charges. It is safe to assume that when Dr. Nelson uses the words ?pre-tax revenue? he is proffering an earnings number (or EBIT) from which operating and shipping costs, smelting and refining contracts, and charges have already been deducted. Before arriving at a net profits number, still left to be deducted are things like royalties, debt service, administrative overhead, and taxes.
Let?s be generous (assume the operators are heavy spenders) and say that only 10% of our ?pre-tax revenue? is ?net profit.? (It should be much higher than 10%). $600,000.00 per month in net profit equals annual net profits, or after-tax earnings, of $7,200,000.00. Similar small mining companies trade with a P/E ratio of about 27 (refer http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html). Using a P/E ratio of 27, a net profit of that amount would make the company worth approximately $195 million dollars ? a far cry from the $7 million liquidation value posited with the Court, and justification for an Official Equity Security Holders Committee to represent shareholders.
David Hartshorn (Exhibit F) is a consulting geologist by profession with over 32 years experience in gold and base metal exploration and mining, and has been working with the Debtors for 6 years (since February 2004) as a consultant. Mr. Hartshorn has designed and mined 9 open pits and 2 underground operations. Additionally, Mr. Hartshorn was an exploration geologist for Gulf Chemical and Metallurgical and a mine manager for Jumbo Mine Co. He is also a manager and Principal of Nevada Trend Exploration, LLC, a company engaged in acquiring and managing mining properties.
Mr. Hartshorn states that his principal responsibilities were and currently are as follows:
a. Managing all exploration on WUCC properties, including all drilling and identification of areas worth drilling to discover and/or confirm copper and other metal deposits;
b. Providing pit calculation and pit designs;
c. Supervising quality control in the pit mining operations;
d. Supervising the analytic lab which is responsible for all exploration drilling evaluation, blast hole and mill assays;
e. Confirming and improving previous pit designs completed by Mine Development Associates (?MDA?) completed in late 1998 and 2005;
f. Providing key inputs to the identification and evaluation of additional properties that could be added to the WUCC holdings;
Mr. Hartshorn further states, ?in the course of my assignments, I reviewed the work of a number of other consultants and mining companies, principally including the Hatch Report of 2008, the MDS feasibility reports, and North American Exploration reports completed by O. Jay Gatten (most recently in 2009) and many other reports and information provided by third parties and the Debtors.? (Exhibit F, pg 3 # 7)
Mr. Hartshorn goes on in his Declaration to explain some of the industry standards used in valuing mineral properties. He talks about NI 43-101 and points out that reserves are classified according to ?increasing geological confidence into Inferred, Indicated and Measured categories.? Measured reserves are the highest standard and are commonly referred to as ?proven? or ?bankable? reserves. Mr. Hartshorn goes into a detailed explanation of the three classifications and then goes on to state:
?In my opinion, the Debtor currently has Measured Resources of 111,054,000 pounds of Copper. (Ibid page 5 Para 10 a.) (Emphasis added).
Mr. Hartshorn then makes the statement in paragraph 10 - d. on page 5 that a $5 to $7 Million drilling budget could be ?reasonably? expected to move 15,994,000 pounds of Copper in the Sunrise Deposit and 192,040,000 of Copper in the Candy B to the Measured status(proven). Optimization of the mill should allow 85 to 90% recovery.
Mr. Hartshorn then points out that there are ?at least 10 targets of known copper mineralization within the existing exposed areas. This indicates in the areas already exposed by the mining activities of the Debtors, there are major deposits waiting to be Measured.
Finally, the Debtors? geological team is gathering historical drilling data, in conjunction with Southern Utah University, conducting fluid inclusion and isotope studies to determine the location of the possible copper porphyry that is the source of the copper in the skarn. Copper porphyry deposits are very important and highly valued since they usually contain vast deposits of copper that average about 0.5 to 1% copper by weight that can be worked on a large scale at low cost.? (Ibid. Pg 6, para 10 - h.)
According to Mr. Hartshorn, the properties of the Debtors have huge potential. Refer to his opinion that the Debtors have 111,054,000 pounds of copper already in the Measured Resources category and another 208,034,000 million pounds of copper that are ready to be moved into the Measured category. That asset alone gives the Debtors 319,088,000 pounds of copper. At an 85 to 90% recovery rate these particular properties, controlled by the Debtors, would produce a minimum of 285,000,000 pounds of copper. At today?s copper prices ($3.34) that is gross revenue of $ 959,178,528.00.
Mr. Hartshorn does not give sufficient information in his Declaration to allow a calculation of ore needs to be processed to produce the copper but, for the purposes of this letter, the assumption is made.
Obviously, the capacity of the mill may be a limiting factor but if we assume it will take 5 years to produce 285,000,000 pounds of copper the Debtors will produce 57 Million pounds per year and revenue (not including silver, gold or other minerals) of $190,380,000.00. If we apply some industry standards to these numbers $190 million in revenue should produce about $34,000,000.00 in profit per year. $34 Million in profit could produce a valuation for the company in the $900 Million Dollar range.
Please be assured that I am NOT predicting a valuation for the company in the $900 million dollar range during the next 5 years.
What I am suggesting is:
1) The value of the Debtor Companies is much higher than the $7 million posited by the referenced documents filed in this proceeding.
2) The potential for windfall profits to be diverted from the current shareholders is very real.
3) The Shareholders need and deserve an Official Equity Security Holders Committee to represent their interests.
4) There are several different scenario?s under which the Debtors are not insolvent and there are several scenario?s under which the Shareholders are ?in the money.?
A (5) Despite the considerable available data I and other shareholders have gathered proving, on an assets vs. liabilities basis, that the Debtors are not ?hopelessly insolvent? the issue of insolvency should not be the primary criteria under which a request for an Official Equity Security Holders Committee should be based.
Whether or not the debtor is solvent is not a controlling or even determinative factor. [In the Matter of Mansfield Ferrous Castings, Inc., 96 B.R. 779, 781 (Bankr. N.D. Ohio 1988)] (rejecting debtor?s insolvency as barring appointment of equity committee, and stating that court would be guided by all of the facts and not just the issue of solvency). This is largely because, as one court rightly pointed out, equity security holders ?might possibly have a different view on the issue of insolvency than [creditors].? Emons, 50 B.R. at 694. Indeed, one court went so far as to find that the issue of insolvency is in fact ?irrelevant? since the Bankruptcy Code specifically authorizes the formation of equity committees and equity?s interests cannot be determined until a plan has been formulated. [In re White Motor Credit Corp., 27 B.R. 554, 558 (N.D. Ohio 1982)] (dismissing appeal of an order appointing equity committee on grounds that bankruptcy court did not err in excluding evidence of debtor?s insolvency).
B. Number of Shareholders. CPRKSA membership is variable. I have included in Exhibit G (Docket # ck18) the list of Shareholders included in the Summary of Schedules filed in these proceedings. That list shows 476 Shareholders holding 5,839,173,422, Shares with 2,656,939,535 of those Shares listed with some form of restriction. I have also included a list of Shareholders (see Exhibit G) sent to me by Mr. Frank Firek of CPRKSA. This list shows 392 Shareholders holding over 2.4 Billion Shares. Please also see the letter from Mr. Firek requesting the appointment of an Official Committee.
The Shares of CPRK are actively traded on the Pink Sheets and the Debtor has indicated a desire to qualify to move to a higher level within the stock trading community by producing the required financial statements and other documents. The status of the bankruptcy proceedings will have an effect on the ability of the Debtor to make such a positive move.
C. Complexity of the Case. The foregoing components of this letter, the exhibits, the supplementary documents and information and the on-going litigation between the Debtors and NSRC highlight the very complex nature of this case.
All bankruptcy cases of multi-million dollar businesses are undeniably factually and legally complex.
It is apparent that any Plan of Reorganization will be a complex plan which will be highly negotiated and will require much give and take between all stakeholders. The equity shareholders deserve a seat in these complex negotiations via the appointment of an Official Equity Security Shareholders Committee.
D. The final determining guideline in the appointment of an equity committee is a question of whether the cost of an additional committee (including financial cost and the cost of delay) would significantly outweigh the concern for adequate representation.
Considering the costs and expenses the Debtors have projected for Administration in this case, (see note below), the complexity of the case, and the very real potential that without an Official Committee the shareholders may be disenfranchised the costs associated with the establishment of an Official Committee of Shareholders can be easily justified. (See Docket # ck 44 & and Nevada Court docket # 90 WU )
(Note: ?Phase 1 Expenditures? as proffered by Debtors: ?Management of the Estate? $175,000/month plus $15,000/month for expenses related to ?Management of the Estate? - ?Corporate Management? $23,000/month for management of the company including Dave McMullin and Marcus Southworth - ?$25,000/month retainer for Edwin Davis? - $8,400/month for Administrative Personnel - $1,500 / month for Stockholder Relations and another approximately $65,000/month for ?Key Personnel? - total over $300,000/mo for what is essentially administrative expenses? (See Nevada Docket # 90 WU entitled Erratum To Motion For Reconsideration of Order Denying Motion for Order Shortening Notice Period ... ) (Exhibit H)
Conclusion
According to the Declaration of Marcus Southworth (Docket # ck24) the shareholders have contributed, through the purchase of the stock of the Debtors, approximately $20 Million dollars in capital investment. This amount is almost twice the amount of the principal (amount not including interest and penalties) ?invested? by the First, Second and Third lien-holders combined. We understand the reasoning behind the positioning of priority liens for creditors and we understand the shifting of the fiduciary duty of the officers and directors of the Debtors toward secured and unsecured creditors. However, we believe justice is not served when shareholders are disenfranchised and may be forced into a 100% loss without the right to even have a voice in the proceedings. We request that the Trustee?s office give us that voice and thereby allow shareholders to participate in determining the future of their investment.
In summary, this case meets the applicable statutory and case law criteria for the appointment of an Official Equity Committee, and accordingly, this is the very type of Chapter11 case where public investors should receive the important protections afforded by such aforementioned committee.
I encourage the U.S. Trustee?s office to take notice of the formation of an unofficial committee in the form of the CPRK Shareholders Association and to immediately order and facilitate the formation of an Official Equity Security Holders Committee together with the requested counsel and other needed professional assistance. An Official Equity Committee is essential to preserving the value of current equity holders, as well as, and in the interest of justice.
RESPECTFULLY SUBMITTED,
__________________
Here is the lawsuit against PN
http://www.copperkingwesternutahminingrestructure.com/wu%20185.pdf
Lawsuit filed against pure nickel for $ 30,000,000.00
Plus at least 1,000,000.00 in fees
doc 185 OFF PACER !!!!!!!!!!!!!!!!!!!!!!!!!!!!!
EHC APPROVED !!!!!!
Statement:
YES!!!! You read the Subject correctly - The CPRKSA Steering Committee has SUCCEEDED in getting an Equity Holders Committee approved. This is in a jurisdiction in which almost nobody can remember ever seeing and EHC approved. Congrats to all involved.
That is the first step. NOW our next hurdle is doing all we can to get the best people possible appointed to the committee. I hope every shareholder will support having the qualified members of out great CPRKSA Steering Committee officially approved as members of the OFFICIAL EHC. Please let us know how you feel because we need to submit a list of names and qualifications to the trustee (through our CPRKSA attorneys).
"Motion granted provided that the Court will only consider granting relief on expedited basis to avoid immediate and irreparable harm. In addition, this Order subject to determination on whether movant's attorneys will be appointed. Subsequent hearing on financing motion will be considered on Sept. 8, 2010 @ 11a.m." William T. Thurman
Hearing 11a.m., 30 Aug, 2010
Doc 177 off Pacer
This is a win for the company, they got the expedited hearing over objections.
I most definitely have read the terms of the DIP, and I agree that they seem extreme. I suspect there will be objections to the terms, but right now they are indeed the only offer on the table. The DIP is not the immediate concern, we need the interim 650K to take care of the insurance and the BLM payments. In the meantime, if anyone has an extra 10 million dollars or so please let me know.
WOW This is pretty good stuff. Take the time to read it.
http://www.copperkingwesternutahminingrestructure.com/wu%20173.pdf
Ahh Big thanks to Laurens at the Watley Group for getting them up so fast on the BK site
http://www.copperkingwesternutahminingrestructure.com/wu%20155.pdf
Sorry, does not work for me, I have sent a email to the guy at Watley who takes care of the BK site, he usually responds quickly. Its doc 155 when it gets posted.
https___ecf.utb.uscourts.gov_cgi-Memorandumsupport for PPFinancing Doc 155bin_show_temp.pl_file=.pdf
New doc 155 on pacer filed by company, shows new valuations that have the shareholders "in the money" MUCH higher then the initial 7 mm valuation. I cant figure out how to do a PDF, but here is a snipnet Should be on the restructuring site later today.
[color=red]DIP Financing?s Benefit To Estates.
34. The estates are benefited greatly after spending the DIP funds. The value of the estate increases from $21,129,105 today [Exhibit ?C? to the Appendix] to between $74,468,490 and $83,285,848 [Exhibit ?M? to the Appendix]. Two methods were used to value the Debtors? estates after the DIP financing has been approve[/color]
No word yet, because of the time difference we may not hear until after the bell. We will post on the CPRKSA site as soon as we hear one way or another. If the Trustee does not approve it, we will present our case to the Judge. On another note a hearing has been scheduled for interim financing. I have heard that they have been in talks with the secured creditors to get some more money before the DIP
11:00 AM 10-29159 Western Utah Copper Company
Matter: Motion for Entry of Order Authorizing Debtor to Obtain Interim Post Petition Financing
11:00 AM 10-30002 Copper King Mining Corporation
Matter: Motion for Entry of Order Authorizing Debtor to Obtain Interim Post Petition Financing
Sorry for your loss TB, it was a little more complicated than that, send me your email address and I will fill you in.
(plus I will make you a formal offer on the car) LOL
marc, you are going to have to compete with me for the car. lol
Trueblue I will give you 10 million of my shares for the car right now. lol Offer is good until tomorrow.
I know that it is worth well over the current value of the shares, but I am still holding out hope for .005-.01 within a year.