Curtis Resources Ltd. (fka CUV (TSX))

[goldenpolarbear]

Ronald Thiessen 1993-Present GBG Chairman, Chairman of Executive Committee, Member of Investment Committee and Member of Special Committee Great Basin Gold Ltd.

http://business.financialpost.com/2012/11/20/the-mess-at-great-basin-gold/

http://www.greatbasingold.com/default.cfm

http://investing.businessweek.com/research/stocks/people/person.asp?personId=790136&ticker=NAK

Investors are mad with the state of play at Great Basin Gold Ltd., an international gold mining company with mines in Nevada and South Africa that is now in bankruptcy protection.

And there’s a lot at stake given that through RBC Capital Markets, Great Basin raised $57.5-million of equity capital just over six months back from a unit offering at $0.75 per unit. It also raised $86.3-million of equity — at $2.55 a share — in February 2011. One year back, again through RBC, it raised $126.5-million from the sale of five-year 8% convertible debentures.

And their rage is directly proportional to how fast developments have changed at the company whose shares are listed in Canada, the U.S. and South Africa.

Adding to the frustration is that battles have emerged between classes of security holders brought on by the demands of the providers of debtor in possession financing and the collateral holders of the convertible debentures thought they enjoyed. (One holder said that he expects, at best, to receive $0.25 on the dollar.) And because Great Basin is obligated to pay the legal costs of the lenders and the holders of the convertibles, about $10-million will be drained. Indeed in its latest update, issued one week back, Great Basin said that the DIP loan “remains in technical default.”

Here is a potted history:

• Aug. 15: The company releases its second quarter financial results and announces a strategic review. For the quarter the company lost $0.05 a share and indicated that “because of the revenue shortfalls, the Company faces a near-term liquidity challenge. The Board formed a special committee to consider strategic alternatives, including asset divestitures, equity financing, bank refinancing, and other possibilities…..” CIBC World Market was retained as the financial advisor.

The chief executive also resigns but the board “concluded that no impairment charge to the carrying value” of its two mines “is currently warranted.” The company indicated that it had implemented “an aggressive further cost reduction program involving off-site and corporate overhead costs and is also working with its lenders to seek to restructure the current term loan facilities.” The stock drops by about 50% on the news.

Great Basin further indicated it wouldn’t be saying anything about the strategic review process “unless and until the Board of Directors has approved a specific transaction or otherwise determines that disclosure is necessary or appropriate.” It added that financing would be solicited and that a deal may, or may not result.

• Sept. 5 In an update, Great Basin said that a special committee “continues to evaluate refinancing and asset sell-down alternatives and is endeavouring to work with all stakeholders to achieve an acceptable resolution of its near term liquidity challenges. A range of viable options remain possible however the Company is not yet in a position to provide any guidance as to if and when an announcement in this regard will be made.”

• Sept 11: Great Basin announces that it has suspended operations at its mine in South Africa, a decision of the special committee. It also announces that it is seeking $30-million to $40-million to close down the Burnstone mine.

• Sept. 18: Great Basin announces that its South African subsidiary (Southgold) has filed for protection under the South African business rescue procedures and that the parent “expects to seek creditor protection this week.” The insolvency filings were meant to allow the two companies time to seek buyers and partners for its gold mining projects.”

One consequence of the filing is that it “constitutes a default under the Company’s unsecured convertible debentures.” Trading in the its shares and debentures will remain suspended; the shares have now been delisted.

• Nov. 15: Great Basin issues an update indicating that an independent restructuring team will be hired as well as adding a second investment banker. In addition it will need additional cash to “bridge the potential funding shortfall.”

Calls to Great Basin seeking a comment weren’t returned.