ZincOx, Jabal Salab, bondholders draft agreement to settle default

By Angela McDaniels

Tacoma, Wash., Dec. 9 - ZincOx Resources plc said a majority of holders of Jabal Salab Co. (Yemen) Ltd.'s $120 million bonds have agreed in principle to release the security over the shares in Jabal Salab and terminate the bonds along with all rights attached to them.

In return, the bondholders will receive the funds in the Jabal Salab accounts and an additional payment of $10 million, according to a company news release.

Of the $10 million, $5.2 million will be paid by ZincOx and $4.8 million will be paid by Ansan Wifks, the company's partner in its Jabali mine and plant in Yemen.

ZincOx said there is approximately $96 million in the Jabal Salab accounts, which means that the bondholders will receive around 80 cents on the dollar.

The company is working to finalize the settlement and complete the necessary documentation with all the bondholders.

As previously reported, ZincOx announced on Nov. 18 that the parties had reached a two-week standstill agreement during which time they planned to finalize their discussions about the default event that occurred under the bond facility, which is being used for the construction of the Jabali mine and plant.

One of the milestones under the bond facility requires that production of 63% of capacity is achieved by mid-August 2010. The technical adviser notified bondholders that it believes this production milestone will be achieved two to three months after the deadline.

Jabal Salab said the notification of this belief to the bondholders constituted a default under the terms of the facility, an event that triggered certain rights for the bondholders including the right to demand repayment of the bonds.

Jabal Salab, which is 52%-owned by ZincOx, entered into the bond facility on Feb. 28, 2008.

ZincOx is based in Bagshot, England, and produces zinc oxide mainly from raw materials obtained from recycling facilities in South Korea, Thailand, Turkey and the United States.

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