The board of Aim-listed BlueRock Diamonds’ principal operating subsidiary, Kareevlei Mining, has resolved to place the company into voluntary business rescue owing to excessive indebtedness.
BlueRock had already requested on February 24 that its shares be suspended from trading on the Aim, pending clarification of the subsidiary’s financial position.
The indebtedness of Kareevlei to construction and mining service group Teichmann South Africa (TSA) increased to R75-million, or £3.4-million, as of February 10, despite a payment to the company earlier in February. TSA has submitted a demand for payment for the outstanding balance and then a request that Kareevlei consent to TSA perfecting its security held through two notarial bonds over the assets and an undertaking that Kareevlei would not be placed in business rescue prior to the bonds being perfected.
These requests were, however, not acceded to and, on February 22, TSA exercised its security over the Kareevlei bank account with the result that the bank account may not be used by Kareevlei.
The Kareevlei board had, as part of its deliberations on the sustainability of the company and the Kareevlei diamond mine, in Kimberley, South Africa, commissioned a team of independent specialists to advise on the mine’s updated plan, future and financial forecasts for the company.
After reviewing the report and the creditor position of Kareevlei, the board has decided it best to place the company into voluntary business rescue, to afford time to assess the necessary actions towards the best outcome for all stakeholders.
Kareevlei has approached Engaged Business Turnaround to this effect, with Warren Richard Castle and Ian Fleming having been nominated as business rescue practitioners.
The board of Kareevlei continues to engage with TSA and its legal advisers on payments, as well as advisers in respect of held cash in the UK totalling £92 000.
The board intends to consult with UK insolvency practitioners in respect of potential courses of action for BlueRock.