Lafayette creditors threaten to take ‘drastic action’

Creditor banks of Lafayette Philippines Inc. (LPI) are reportedly threatening to take "drastic action" if the mining firm is not able to operate its Rapu-Rapu mining project in Albay by next week.

According to government sources, Lafayette has not been able to service its outstanding debts to its creditors since the stoppage of its mining operations in October last year.

Lafayette’s exposure include a $35 million debt financing facility, a A$140- million hedged market to market exposure and a A$60-million metal forward contract liability.

Lafayette’s creditors had given it two weeks, ending next week, to resolve its problem.

Lafayette has been requesting the government to allow it to reopen its Rapu-Rapu polymetallic project in Rapu-Rapu, Albay.

Lafayette has assured that the reopening would merely involve "testing and commissioning" of the idled plant and would not involve resumption of full scale mining operations.

Lafayette claims that it has complied with all 21 conditions imposed by concerned government agencies.

Unfortunately, however, the recently created Rapu-Rapu Fact Finding Commission has still not completed its evaluation of the alleged accidental discharge of mine tailings, thus, delaying the reopening of the project.

The delay has reportedly created a lot of uncertainty, specially for foreign investors and banks.

If the banks decide to take action against Lafayette, it could lead to a permanent closure which could mean an investment loss of $259 million consisting of $43.4 million in bank loans, $39.5 million in shareholder advances and $176.1 million in bank hedging exposures.

The banks which have an exposure in the project include N.M. Rothschild & Sons (Australia) Limited, Australia and New Zealand Banking Group Limited, ABN AMRO Bank NV (Australia), Investec Bank (Mauritius) Limited and Standard Chartered First Bank Korea