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Allied Nevada mine buyer’s loan concerns resolved with stipulation
By Kali Hays
New York, May 27 – Allied Nevada Gold Corp. and its asset buyer WK Mining (USA), Ltd. received approval of a stipulation resolving the buyer’s concerns regarding Allied’s $78 million debtor-in-possession loan under a May 27 order from the U.S. Bankruptcy Court for the District of Delaware.
As previously reported, WK Mining asked the court to reconsider its approval of the DIP loan and to clarify an anti-assignment clause in the loan agreement, claiming it had “no reasonable expectation that a DIP financing order would contain a provision that arguably would eviscerate any anti-assignment clauses in any contracts that the debtors seek to sell at a future sale hearing.”
At the end of April, WK Mining purchased a mining facility in Nevada from Allied VNC, Inc. The purchase agreement included an anti-assignment clause related to a provision whereby Allied retained a right to hold a 25% interest in a limited liability company to be formed by WK Mining to operate the purchased facility.
The agreement also allows for WK Mining to acquire that retained interest for a flat fee of $10 million at Allied’s discretion.
The buyer’s main concern was related to a specific section of the DIP loan order directed toward landlord and lease agreements, where language refers to “any provision of any lease or ... license, contract or other agreement ... is hereby deemed unenforceable.”
With the approved stipulation, the parties agreed that nothing in the DIP agreement or DIP order “shall in any way constitute a finding as to the assignability of any agreement” with WK Mining and its affiliates.
WK Mining will withdraw its reconsideration motion and a June 18 hearing on the matter was cancelled.
Allied Nevada is a Reno, Nev.-based gold and silver miner that filed for bankruptcy on March 10. Its Chapter 11 case number is 15-10503.
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