Pegasus's Sister Company Royal Oak continues to disappoint shareholders.
$6.4-million arbitration award filed in court
Royal Oak Mines RYO Inc
Shares issued 140,795,079 May 7 close $1.52
Fri 8 May 98 Street Wire by Brent Mudry
A Kemess South contractor has filed a recent $6.4-million arbitration award in court on the eve of the expected closing of Royal Oak Mines' $120-million (U.S.) financing. In a rush petition filed on Wednesday in B.C. Supreme Court, Tercon Contractors of Kamloops claims Royal Oak has not yet paid an arbitration partial award made on Tuesday after three days of commercial arbitration in a cost overrun dispute. In a court-filed affidavit, Tercon lawyer Brian McLean notes that Royal Oak has sent out correspondence stating that the financing is expected to complete on Friday. Tercon hopes to rank ahead of assorted builders liens and claims
its award from the proceeds of the financing. The last-minute scramble centres on conditions of the $120-million (U.S.) financing. Royal Oak director William Sheridan, also a lawyer, notes that one condition places a $10-million cap on the cumulative builders liens permitted to rank ahead of the lender's security interest, according to Mr McLean. In his Wednesday affidavit, the Tercon lawyer notes that builders liens "substantially in excess" of $10-million are currently registered against the Kemess South property, according to records in the Gold ommissioner's office. The Tercon dispute relates to its August, 1997, contract "C500," covering construction of the tailing pump house foundations and associated structures, and its July, 1997, contract "C105c," covering further construction of the tailings dam. Royal Oak and Tercon appointed Christopher O'Connor as arbitrator on January 22. The arbitration process
resulted in Mr O'Connor awarding Tercon $5.6-million on contract C500 and $854,000 on contract C105 on Tuesday. "I consider it is critical for the petitioner to obtain judgment in respect of the award immediately in order that it can take all necessary steps to maximize its opportunity to recover payment from the funds intended to be advanced," states Mr McLean. The court clerk's notes indicate that Justice Shaw heard the petition on Thursday and granted Tercon leave to enforce its partial arbitration award of $6.4-million.
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