Friday April 16, 6:18 pm Eastern Time
Canada court appoints interim receiver for Royal Oak
TORONTO, April 16 (Reuters) - Gold miner Royal Oak Mines Inc. (Toronto:RYO.TO -
news) edged closer to the brink on Friday when a Canadian court appointed an interim
receiver to oversee the financially troubled company's assets.
Justice James Farley of the Ontario Court authorized an interim receiver to look at selling off
Royal Oak's mining assets, but rejected a request by main lender Trilon Financial Corp.
(Toronto:TFCa.TO - news) for a fast, piecemeal liquidation of assets.
Trilon is owed almost C$200 million by Royal Oak.
''It is appropriate, just and reasonable to appoint an interim receiver,'' Farley said in his ruling.
Kirkland, Washington-based Royal Oak has been devastated by falling gold prices and problems surrounding the construction
of its new Kemess gold mine in British Columbia. It had struggled for months to negotiate flexible financing for more than $320
million in debt.
The court's decision, however, left open the possibility the company could survive. It remains under the Companies Creditors
Arrangement Act, a Canadian law under which firms are protected from creditors while they attempt to restructure.
''The possibility of restructuring will still exist,'' said a Royal Oak lawyer.
But analysts said the company faced an uphill battle to survive in an environment of weak gold prices even if it escaped
receivership.
Gold, historically a hedge against financial uncertainty and international crisis, fell last summer to 18-year lows near $270 an
ounce from a 1997 high of $363.95 an ounce.
The precious metal traded at $283.60 an ounce on Friday.
Royal Oak shares traded at C$0.065 a share on Friday on the Toronto Stock Exchange.
($1=$1.48 Canadian)
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