Allied Nevada Gold voluntarily filed a chapter 11 bankruptcy protection to be able to start implementing its financial restructuring.
The company and its subsidiaries filed a petition for relief in the U.S. Bankruptcy Court for the District of Delaware on Tuesday.
On October, 2012, the shares of Allied Nevada Gold traded as much as $40. Since then, the stock plummeted, and it is trading less than a dollar or $0.85 per share today. The stock was once a hot hedge fund name.
In a rare interview with Harvard Business School that was published online earlier this month, (it has since been taken down) value investor Seth Klarman spoke at length about his investment process, philosophy and the changes value investors have had to overcome during the past decade. Klarman’s hedge fund, the Boston-based Baupost has one of Read More
Details of Allied Nevada Gold bankruptcy
Allied Nevada Gold is engaged in exploring, developing, mining and producing gold in the state of Nevada. The company said it entered into an agreement with certain holders of its 8.75% senior unsecured notes due 2019, and secured bank lenders to bring about a reduction of its funded debt obligations. They also agreed to provide the company with additional liquidity.
According to Allied Gold Nevada, it will continue operating its business as “debtor in possession” under the authority of Bankruptcy Court and in compliance with the provisions of the Bankruptcy Code, and court orders.
The gold mining company said its trade creditors and vendors are expected to receive full payment under its proposed financial restructuring, which is subject to the approval of the court.
Boteholders agreed to support company’s restructuring
Allied Neva Gold said its secured bank lenders and noteholders, who collectively own or control 67% of the total outstanding principal amount if its notes agreed to support its financial restructuring.
The secured bank lenders and note holder signed a restructuring support agreement with Allied Nevada Gold. The company will restructure its debt and equity (including its common stock and existing warrants to purchase common stock).
According to Allied Gold Nevada, the supporting noteholders also agreed to provide a $78 million debtor in possession (DIP) secured credit facility. The company intends to use the DIP financing to maintain its business operation as usual during the restructuring process.
Allied Gold Financial believes that it has enough liquidity (current and anticipated cash) for expenditures and to maintain its business operations while processing its chapter 11 bankruptcy protection.
The company submitted “First day Motions” to the Bankruptcy Court. Approval of the motions would help ensure its smooth transition to chapter 11. Its court filings showed that the value of its assets is more than $941 million, and it has more than $663 million debt.