Photo by: Reuters
TORONTO (miningweekly.com) – The TSX-listed stock of North American gold producer Veris Gold on Monday climbed after the company announced that a restructuring committee announced earlier this month was investigating strategic alternatives and planning the financial restructuring of the company.
The three-man team is chaired by president and CEO François Marland and included independent directors Gerald Ruth and Dr Barry Goodfield.
The special committee had retained investment bank Raymond James & Associates as its sole investment banking adviser to provide financial advice concerning a variety of potential business transactions that may be undertaken in the course of the financial restructuring of the company.
The catalyst for the restructuring was the company falling into default of its debt repayment obligations to Deutsche Bank after a fire at the mill at the Jerritt Canyon mine in Elko, Nevada, which consequently caused a temporary production shutdown in December 2013.
"We are very pleased to be working with Raymond James, a well-known and highly respected full-service international investment bank. The fire at Jerritt Canyon in December placed the company in a difficult financial position,” Marland said.
The forward gold purchase contracts with Deutsche Bank did not contain a force majeure provision, which would have allowed Veris to temporarily suspend its obligations under the contracts owing to circumstances beyond its control.
Deutsche Bank had issued Veris with a ‘notice of default’ and was considering what actions, if any, it would take. This included assigning Deutsche Bank's rights and obligations under the agreements to a third party, or taking ownership on the security pledged, which was Veris’ direct and indirect interest in the Jerritt Canyon mine.
Veris’ TSX-listed stock on Monday traded up 16.13% at C$0.36 apiece, after having fallen 77% in the past year.