Atlas Mining retires P878-M debt through swap deal

Atlas Consolidated Mining and Development Co. (ACMDC) has settled another P878.3 million in historic debts through a debt-to-equity swap with a group led by Alakor Corp., an investment and holding firm controlled by Alfredo Ramos of the National Bookstore chain.

In a disclosure to the Philippine Stock Exchange, ACMDC said the additional share issue was covered by the debt-to-equity agreement entered with Alakor in October 2000 and has been approved by the PSE and the Securities and Exchange Commission.

Under the memorandum of agreement (MOA), Alakor assumed and completely settled ACMDC’s debts, including all unpaid interest and penalties owed to local and foreign bank creditors amounting to P1.9 billion, in exchange for new shares equivalent to a 41-percent stake in the company.

In addition, Alakor has gained the right to rehabilitate and re-open ACMDC’s copper mine operations in Toledo. Cebu – once the fifth largest copper mine in the world – but closed in 1994 due to the depressed prices of copper in the international market.

The new shares, priced at a par value of P10 each, consists of 81 million common stocks issued to Alakor while another 6.8 million were issued to local mining firm Minoro Mining and Exploration Corp.

In November 1996, ACMD forged a tie-up with Minoro in a debt-to-equity deal that would grant the latter the exclusive right to rehabilitate and run the minesite and control 58 percent of ACMDC with the infusion of funds to pay off the company’s debts. The swap also diluted the holdings of the A. Soriano Corp. (Anscor) group to 13 percent in ACMDC.

But in July 2000, ACMDC terminate its deal with Minoro, claiming the latter failed on its promise to vigorously pursue the rehabilitation program, thus putting more burden on ACMDC’s capacity to pay off creditors.

With the entry of Alakor into the picture, ACMDC has cleared itself to its debt load. Alakor said aside from the settled loans, it has assumed another P2.5 billion in debts which, subject to regulatory approvals, will also be converted into new ACMDC shares at P10 par value.