White Energy updates E. Kalimantan coal upgrading project
Thursday, July 31 2014 - 12:21 PM WIB
PT Kaltim Supacoal (?KSC?) ?WEC 51%
Update on Legal Dispute
As previously advised to shareholders, BCBC Singapore Pte Ltd (?BCBCS?) and Binderless Coal Briquetting Company Pty Limited (?BCBC?) are currently involved in legal proceedings against Bayan and Bayan International Pte Ltd in the High Court of the Republic of Singapore, over matters relating to the Tabang coal upgrading plant, located at Bayan?s Tabang mine in East Kalimantan, Indonesia.
The issues in the proceedings include a claim by BCBCS and BCBC against Bayan for damages for breach of the Joint Venture Deed between the KSC shareholders, including the obligation to supply coal to KSC and the obligation to provide funding to KSC. Bayan has filed a defence to the claim, and also a counterclaim against BCBCS and White Energy seeking damages.
Bayan purported to terminate the Joint Venture Deed in February 2012, which BCBCS regarded as a wrongful repudiation. Following BCBCS? acceptance of Bayan?s repudiation, the KSC Joint Venture was brought to an end. BCBCS is pursuing Bayan for all damages suffered as a result of Bayan?s wrongful repudiation.
The directors believe that BCBCS took all steps to fulfil its joint venture obligations and that the failure of the Joint Venture is due to Bayan?s failure to supply coal and provide funding to KSC and its purported termination of the Joint Venture Deed.
Following an application by BCBCS, the Supreme Court of Western Australia made freezing orders in respect of Bayan?s 56% shareholding in Kangaroo Resources Limited, a publicly listed Australian company. Bayan sought to challenge the grant and scope of those orders, including a challenge to the Court?s jurisdiction to make such order s (including on constitutional grounds).
This challenge was heard by the Supreme Court in February 2013. On 26 June 2013 the Supreme Court dismissed Bayan?s challenge to the grant and scope of the freezing orders and extended the freezing orders indefinite ly. In its reasons for decision, the Supreme Court found that, amongst other things, BCBCS had established the elements necessary to obtain a freezing order, including that BCBCS had established for the purposes of its application for a freezing order that it had a good arguable case: (i) in respect of its claim against Bayan for breach of the Joint Venture Deed; and (ii) to recover damages in respect of at least its lost investment in the KSC Joint Venture.
On 15 July 2013, BCBCS was served with notice of Bayan?s appeal from the orders made by the Supreme Court. Bayan?s appeal is limited to a challenge to the Supreme Court?s jurisdiction to make those orders. Bayan is not appealing the Supreme Court?s findings that BCBCS had established the elements necessary to obtain a freezing order, including that BCBCS had established for the purposes of its application for a freezing order that it had a good arguable case. Bayan?s appeal was heard before the Court of Appeal of Western Australia on 11 and 12 March 2014 and we currently await the judgement.
The orders will remain in place unless and until there is a further order made by the Court.
Status of Tabang Operations
As a result of the above dispute, KSC suspended operations at the Tabang plant in late November 2011. The directors believe that, at the time of suspension of operations at Tabang, the various plant modification works being undertaken at site were over 95% complete.
Following a petition filed by a number of local creditors of KSC in the Commercial Court of Surabaya, Indonesia, administrators were appointed to KSC and KSC has now been placed into bankruptcy. Curators have been appointed to manage this process. All KSC staff have been terminated from the Tabang site. The Curators are currently seeking to realise KSC?s assets with the object of distributing any proceeds to KSC?s creditors.
As shareholders are aware, the White Energy Group has previously fully impaired its investment in KSC and as such the bankruptcy process will not have any further impact on the accounting results of the White Energy Group. (end of excerpt)