Administrator looks to Investec to run the rule over Kagara
By David Winning
INVESTEC has secured the mandate to carry out a strategic review of zinc and copper miner Kagara, which was placed in administration at the end of April.
Investec beat off competition from Rothschild and Argonaut to land the mandate from Kagara’s administrator Taylor Wooding.
Kagara’s market value stood as low as $95 million when it was placed in administration, reflecting the squeeze put on its cashflow and profitability by a combination of soft commodity prices and the high Australian dollar.
However, an early assessment by Taylor Woodings found the book value of Kagara’s assets to be $411m, including its 62 per cent stake in Brisbane-based precious metals explorer Mungana Goldmines.
The strategic review is likely to take several weeks, giving Kagara’s administrators enough time to decide whether to accept Investec’s recommendations, which could include a restructuring, fresh injection of capital or sale of assets.
Late May, the Federal Court of Australia ordered an extension of the “convening period” of the administration up to November 25. The revised date adds an extra six months to the original timetable to assess Kagara’s options and get best value for creditors and other stakeholders. Taylor Woodings has said it expects final arrangements to be known well before the November deadline.
In mid-May, Investec agreed to refinance Kagara’s debts to ensure costs such as salaries and maintaining mine sites are met.
The bank’s commitment at the time included an immediate $3m injection of funds for use as working capital, and a $23m bank guarantee facility.