Don Clarke was quoted in a very short column in today's paper. Apparently there is a Calgary businessman looking to buy/takeover bsr. The following story will show one of the reasons why Walsh had the courage to still stick around for the last few months. That $59,000 credit card bill he ran up maybe was his monthly food(or feed) bill.
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The Bre-X Saga:
Fortune or Folly?
Walsh getting into black gold
Monday 10 November 1997
Sydney Sharpe, Calgary Herald and Canadian Press
David Walsh is getting back into the gold business -- black gold.
The president of bankrupt Bre-X Minerals Ltd. believes he has
what it takes to run an oil and gas company. But he may be hard
pressed to find analysts willing to jump on board the Bresea
Resources bandwagon.
Even companies with a lot of experience are finding it very difficult
these days, notes Robert Hinckley, an analyst with Merrill Lynch &
Co.
"To jump into the oilpatch, with a big smile on your face, is very
tough," he adds. "He has a huge credibility problem, and it will be
difficult to do anything."
The six remaining employees of bankrupt Bre-X Minerals were paid
$182,000 in salary and bonuses last month even though they failed
to produce a court-requested reorganization plan.
At the same time Walsh has run up $59,000 on a company credit
card, says a report prepared by Price Waterhouse Ltd. No further
details were available.
The salaries and bonuses were part of a management contract
arranged in May when Bre-X filed for protection under the
Companies' Creditors Arrangement Act, Price Waterhouse said in
the report dated Nov. 3.
Under the contract, the employees, including Walsh, were entitled to
a salary and a "completion bonus" if they remained until CCAA
protection expired Oct. 31.
Last year, Walsh earned $35 million trading Bre-X stock.
Bresea, the parent company of Bre-X, was given a stay of
bankruptcy execution this week, which leaves Walsh in control of
the company for a while longer.
Walsh, who is Bresea's president, hopes to buy some Western
Canadian producing properties which will give the company revenue
and cash flow to offset expenses.
In an affidavit, Walsh states Bresea's "desire to be pro-active in the
resources industry."
He suggests buying properties with debt funding of $66 million,
which he hopes to "negotiate with potential lenders in Canada, if
possible, or outside Canada if required."
Any analyst in the oilpatch points to two crucial requirements for a
successful company: management and track record.
"He certainly does have a track record," said Ian Ollers, an analyst
with Maison Placement Canada Inc.
Oil and gas companies rely on reputation.
"That he definitely has," added another.
Bre-X, once the darling of the Canadian mining industry, has now
become synonymous with one of the most spectacular corporate
flameouts since the Great Depression.
At one point, Bre-X chief geologist John Felderhof estimated the
company may have almost 200 million ounces of gold at its Busang
site in Indonesia.
The find began unravelling as a fraud on March 19 when Bre-X
geologist Mike de Guzman, co-discoverer of deposit, plunged from
a helicopter in an apparent suicide.
A Bre-X commissioned report blamed the salting fraud on de
Guzman.
Hinckley noted "most oil companies get an outside engineer to audit
their reserves."
But when you've been involved with a company that has lost as
much money as Bre-X has, analysts say Walsh will have a tough
time attracting any kind of capital.
"This whole business is about people and ideas," said Martin
Molyneaux, an analyst with FirstEnergy Capital Corp.
Ideas he had in spades.
Bresea initially staked oil and gas claims in Louisiana in the mid
1980s, which came to naught.
But if Bresea is getting back to basics, it could end up paying a
premium for any property it purchases.
"No company is giving away properties. You're lucky if you get
something that is fair market value," said Hinckley.
And Bresea could be boxing with royalty trusts when they go after
properties that don't require any investments for five years.
"Royalty trusts have cheaper costs of capital, and can outbid them,"
says Ollers.
"If he outbids the royalty trusts, he is paying too much."
Even though this leaves Walsh in a Catch-22 situation, no one is
completely counting him out as an oilman.
". . . Stranger things have happened," mused Molyneaux.
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