White Energy updates E. Kalimantan coal upgrading project
Friday, October 31 2014 - 02:49 AM 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 PT Bayan Resources Tbk (?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 PT Kaltim Supacoal (?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 BCB CS 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.
The Company refers to its previous announcements in relation to the freezing orders made by the Supreme Court of Western Australia (?Supreme Court?) on 5 April 2012 in favour of BCBCS in respect of Bayan?s 56% shareholding in Kangaroo Resources Limited (?KRL?), a publicly listed Australian company (?freezing orders?).
The Company previously advised the market on 26 June 2013 that the Supreme Court had dismissed Bayan?s challenge to the grant and scope of the freezing orders and extended the freezing orders indefinitely.
On 15 July 2013, BCBCS was served with notice of Bayan?s appeal from the orders made by the Supreme Court. Bayan?s appeal was limited to a challe nge to the Supreme Court?s jurisdiction to make those orders.
Bayan?s appeal was heard before the Court of Appeal of Western Australia (?Court of Appeal?) in March 2014. On 25 September the Court of Appeal unanimously dismissed Bayan?s appeal to the grant and scope of the freezing orders. An order has been made that Bayan pay BCBCS? costs of the appeal.
On 23 October 2014, BCBCS was served with notice of Bayan?s application for special leave to appeal to the High Court of Australia from the orders made by the Court of Appeal.
Bayan?s appeal is limited to a challenge to the Supreme Court?s jurisdiction to make these orders. Bayan is not appealing the Supreme Court?s findings that BCBCS had established the White Energy Company Limited Page 9 of 18 elements necessary to obtain a freezing order, incl uding that BCBCS had established that it had a good arguable case:
? in respect of its claims against Bayan for breach of the Joint Venture Deed, and
? to recover damages in respect of at least its lost involvement in the KSC Joint Venture.
The freezing orders against Bayan will remain in place unless and until there is a further order made.
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, admini strators 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 ob ject of distributing any proceeds to KSC?s creditors.
We understand that the Tabang plant, located on the Tabang concession which is owned and operated by Bayan, has been significantly vandalised.
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)