Mercator Minerals to restructure; subsidiaries file Chapter 11 cases

Subsidiary Mercator Mineral Park hires bank for standalone sale

By Caroline Salls

Pittsburgh, Aug. 26 – Mercator Minerals Ltd. filed a notice of intention to make a proposal under the Canadian Bankruptcy and Insolvency Act, and four of the company’s wholly owned subsidiaries filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the District of Delaware, according to a Mercator news release.

The units that filed Chapter 11 cases are Mercator Mineral Park Holdings Ltd., Lodestrike Resources Ltd., Mineral Park Inc. and Bluefish Energy Corp.

Mercator said Mineral Park will hire an investment bank for a standalone sale.

The company said its board of directors believes the standalone sale of Mineral Park would result in a recovery of less than 100% to its Mineral Park lenders.

Mercator’s debt under a parent guarantee, in addition to its other debt, has created a situation in which it is unable to meet its current and future obligations, forcing the filing of the notice of intention, the release said.

Mercator said it has been considering its alternatives, including the sale of the company. Several interested parties have delivered proposals that the Mercator board of directors believes would be in the best interest of all stakeholders.

However, the company said the proposals were shared with Mineral Park lenders, and the lenders “did not constructively engage with the company or our financial adviser.”

According to the release, a notice of intention is the first stage of a restructuring process that allows the company to restructure its financial affairs through a proposal and provides an opportunity to avoid bankruptcy.

Once the notice has been filed, the company will be granted up to an initial 30 days of protection from its creditors to allow it to move forward with a proposal.

In connection with its bankruptcy case, Mineral Park requested court approval to use cash collateral in a proceeds account to fund its operations while in bankruptcy. The company said it did not obtain other post-bankruptcy financing.

According to court documents, Mineral Park has $100 million to $500 million of both assets and debt.

The company did not list any unsecured creditors with claims of $1 million or more.

Deloitte Restructuring Inc. has been appointed as the trustee in Mercator’s proposal proceedings. The U.S. debtors are represented by Pachulski Stang Ziehl & Jones LLP in the Chapter 11 cases.

Based in Vancouver, B.C., Mercator is a copper mining company. The lead Chapter 11 case number is 14-11996.

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