July 23 (Bloomberg) -- A Jersey court rejected appeals by a joint venture partly owned by OM Group Inc., the world’s biggest cobalt producer, and Democratic Republic of Congo’s state-owned Gecamines over a $100 million debt claim.
The Jersey Court of Appeal upheld a lower court’s decision that FG Hemisphere Associates LLC, a distressed-debt fund, could seize payments by OM Group’s Groupement pour le Traitement du Terril de Lubumbashi Ltd., or GTL, to Gecamines to pay off a debt owed by the Congolese state, according to a judgment published on the Jersey Law website yesterday.
Congo owes more than $100 million in principal, penalties, and interest to FG Hemisphere for a debt the fund purchased from a Sarajevo-based company that built electricity projects in Congo in the 1980s. The New York-based fund has attempted to seize Congo’s assets in jurisdictions around the world to collect the debt.
Two of the court’s three judges agreed that Gecamines was liable for the debt because it is “an organ of the state,” while all concurred that the Jersey courts could enforce the debt because GTL is registered in the British Crown dependency. Gecamines can appeal the decision to the Judicial Committee of the Privy Council, the court of final appeal for U.K. overseas territories and Crown dependencies.
Through March 31, an injunction by the Jersey courts had already frozen $74.8 million owed to Gecamines by GTL, according to Cleveland, Ohio-based OM Group’s first-quarter report. GTL, a venture between OM Group, Gecamines and George Forrest International SA, operates a smelter in Congo that is OM Group’s primary source of cobalt.
Spokesmen for OM Group and George Forrest and officials for Gecamines didn’t immediately respond to e-mail and mobile-phone message requests for comment outside of normal business hours.
The court also proposed an order that Congo’s debt to FG Hemisphere should be recalculated using simple interest instead of compound interest, which would reduce the total owed, according to the judgment.
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