Thursday, November 6, 1997
Bre-X placed in bankruptcy, but Bresea is
still breathing
By CLAUDIA CATTANEO
Calgary Bureau Chief The Financial Post
Bre-X Minerals Ltd. is bankrupt, but the future of its richer sister, Bresea Resources Ltd., is in limbo
pending an appeal of a court ruling yesterday.
Angry lawyers for Alberta and B.C. shareholders said the delay leaves an opening for Bre-X and
Bresea chief David Walsh to push through a plan to reorganize Bresea into an Alberta-based junior oil
and gas company.
Alberta Court of Queen's Bench Judge Robert Cairns ordered Bre-X into bankruptcy yesterday
under the supervision of Deloitte & Touche as bankruptcy trustee.
He then sent Bresea into the hands of receiver Price Waterhouse, with a mandate to put it into
bankruptcy under trustee Arthur Andersen.
But he stayed his own order on Bresea after its lawyers said they would
appeal.
Lawyer Howard Gorman, speaking for the Bresea group, argued Bresea's
future should remain in the hands of its shareholders, who could appoint a new board and new officers
and implement a new business plan.
"Mr. Walsh isn't prepared to let go," protested Clint Docken, a lawyer representing Alberta and B.C.
investors.
In a business plan recently filed with the court, Walsh -- who owns 14% of Bresea -- says Bresea
management wants to keep the company active in the resource industry by buying proven oil and gas
properties.
As an example, the company says it has looked at an $86-million package of producing properties
from Shell Canada Ltd. that could be funded through $66 million in debt financing.
"The purpose of this illustration is to highlight Bresea's desire to remain in the resource business, be
profitable and provide all the company's shareholders the opportunity to see the company actively
involved in the rebuilding process," Walsh says in plan filed with the court.
Alberta and B.C. investors want Bresea bankrupt so they can tap its assets, which include $26
million in cash, assets in Indonesia and subsidiaries in the Netherlands.
In contrast, Bre-X assets have dwindled to US$5 million. At its peak, the company was worth $6
billion in market capitalization. Investors lost billions when claims of huge gold deposits in Indonesia
turned out to be fraudulent.
Lawyer Brian O'Leary, arguing for the Alberta and B.C. group, said Bresea ought to be made
bankrupt because it's controlled by the same people as Bre-X and shares its offices and employees.
The company conceded it was insolvent last May when it filed for court protection from creditors, he
said.
Ontario investors, who worked out a side deal with Walsh last week, are happy with keeping Bresea
in operation.
Cairns allowed the disbursement of $25,000 from the seized Bresea fund to keep it in operation
pending the outcome of the appeal.
David Klein, a lawyer representing B.C. investors, told the court keeping Bresea alive would only
delay the inevitable, while eating up its remaining funds through legal and other bills.
"This company is toast," he told the court. |
