Paladin launches arbitration against Langer Heinrich JV partner

JOHANNESBURG (miningweekly.com) – Dual-listed Paladin Energy on Thursday launched arbitration proceedings against joint venture (JV) partner China National Nuclear Corporation’s (CNNC’s) Overseas Uranium Holdings subsidiary to seek orders and declarations regarding the sale of the Langer Heinrich mine (LHM), in Namibia’s Erongo region.

As part of Paladin's restructure proposal, there is a potential option for CNNC which, if validly exercised, could entitle the nuclear-technology company to the right to acquire Paladin’s 75% share in LHM.

Paladin earlier this month received a notice from CNNC requesting that the company determine the fair market value of its share capital in Langer Heinrich Mauritius Holdings – the holding company of the owner of LHM.

The fair value determination process would be the first step in a process that may lead to CNNC exercising its potential option to acquire Paladin’s share in LHM, if the option validly exists and is dependent on CNNC establishing that an event of default has occurred under the LHM shareholders agreement.

Paladin is disputing that an event of default has occurred, as well as the validity of the notice received from CNNC.

Disputes under the LHM shareholders agreement are subject to the laws of Western Australia and must be referred to arbitration before the Singapore International Arbitration Centre.

Paladin will seek to extend existing standstill arrangements with creditors to afford time to pursue the proceedings and to ensure the company has adequate funding.

In the event the option is proven to be valid, it is unlikely that Paladin will be able to implement its restructure proposal, it warned shareholders.

Paladin has executed standstill agreements with bondholders representing 75% of holders of 2017 convertible bonds and 87% of holders of 2020 convertible bonds.

“CNNC’s actions are disappointing given the support the restructure proposal has received to date, including its failure to proceed with the acquisition of an additional 24% stake in LHM when it was offered to them last year and its repeated refusal to fund the working capital requirements of LHM,” the company said in a statement.

It added that, as a result, CNNC has “put at risk” the interests of Paladin’s stakeholders, including 26 000 small shareholders, 1 000 employees, international financial institutions and sovereign-related entities.