Imperial seeks reorganization

Vancouver — Cash-strapped Imperial Metals (IPM-T) has presented a plan of arrangement to its creditors and shareholders that would clear off $10.7 million in liabilities.

Under the plan, Imperial intends to divide its operations into two distinct businesses — one focused on oil and natural gas, and the other on mining. The company’s oil and gas assets will be retained in Imperial Metals, which will be renamed Imperial Energy. Another company, New Imperial, will be formed to hold the mining assets.

Shareholders and creditors of Imperial Metals will meet in early March to vote on the plan, in which each share of Imperial (except those held by non-residents) will be exchanged for one share of Imperial Energy and one class B share of Imperial. The Class B share in turn can be exchanged for one share of New Imperial. Each share of Imperial held by a non-resident will be disposed of for one share of Imperial Energy and one share of New Imperial.

Unsecured creditors, who are owed $4.6 million, will receive $1 million in cash plus 15.8 million shares of Imperial Metals.

The claims of the convertible note-holders and a portion of the claim of the non-convertible note-holders, which total $6.1 million, will be discharged in return for 61.2 million shares of Imperial Metals. Imperial Energy will assume the remainder of the claims of the non-convertible note-holders, which total $3 million.

New Imperial will assume the $6.3 million in non-interest-bearing debt owed to Japan-based industrial conglomerate Sumitomo. The loan is secured by the assets of the Mount Polley mine in northern British Columbia, and is repayable only when Mount Polley is in operation. A statutory lien against Mount Polley, totaling $1.15 million, will be assumed by New Imperial. Some trade creditors, with secured claims of $251,176, will be paid off by New Imperial.

Following settlement of the debts, shares of New Imperial will be consolidated on a 10-to-1 basis.

Imperial Energy will apply for continuance as an Alberta company and seek to remain listed on the Toronto Stock Exchange.

Imperial holds a 100% interest in the Mount Polley copper-gold mine. The mine struggled in the face of low metal prices and failed to turn a profit; as a result, operations were ceased in September 2001. Situated 56 km northeast of Williams Lake, the 18,000-tonne-per-day open-pit mine-and-mill facility was brought into production in the summer of 1997 at a capital cost of $115 million. The mine cranked out 15,500 tonnes copper and 83,194 oz. gold from its Cariboo and Bell pits in 2000. The average grade is 0.35% copper and 0.53 gram gold.

The company also holds a half-stake in the Huckleberry copper-molybdenum mine, 85 km southwest of Houston, B.C. The mine processes 21,000 tonnes of ore per day. During the first six months of 2001 the mine produced 17,690 tonnes of copper and 453 tonnes of molybdenum, with head grades of 0.52% copper and 0.017% molybdenum. The Japan Group, a consortium comprising Mitsubishi Materials, Dowa Mining, Furukawa and Marubeni, owns the remaining half of Huckleberry.