Benguet may retire 90% of P1.2-billion debt after Kingking deal

MANILA, Philippines - The proposed deal between Benguet Corp. and St. Augustine Mining will enable the local mining firm to retire up to 90 percent of its P1.2 billion debt burden.

According to highly-placed mining sources, Benguet is getting a very “sweet” deal with St. Augustine Mining (a subsidiary of American firm Russell Mining & Minerals, Inc.) for the turnover of Benguet’s mining right in the Kingking mine – the mineral processing and sharing agreement (MPSA) which is owned by the National Development Corp.

The Kingking mine is located in Compostela Valley in Mindanao.

Under the deal still being hammered out by Benguet and St. Augustine/RMMI, the American mining firm has basically worked out an agreement with Benguet’s creditors to extinguish their debt through a buyback/offsetting scheme.

St. Augustine would pay Benguet a still unspecified amount – estimated at $20 million to $40 million – a portion of which Benguet would use to buy back/offset about 90 percent of its outstanding debt papers.

Benguet, as earlier announced by its chief financial officer Renato Claraval, is negotiating to buy back at about 30 percent of face value of its outstanding P1.2 billion debt.

This deal, sources explained, would be “sweet” for Benguet because it would finally be able to extinguish up to 90 percent of its debt burden, and earn it some additional cash for letting go of its mining rights for the Kingking project which it never operated.