Mercator Seeks to Avoid Bankruptcy Filing in Canada

Mercator Minerals Ltd., the copper miner whose stock plummeted 80 percent last year, is trying to avoid bankruptcy in Canada after four units filed to reorganize in the U.S.

Mercator announced today that it filed a notice of intention to make a proposal under Canada’s Bankruptcy and Insolvency Act. The notice will provide as much as 30 days’ protection from creditors in which to pursue alternatives including a sale of the company. The move comes after lenders of a unit failed to “constructively engage with the company” or its financial adviser, Mercator said in a statement.

The notice of intent “provides an opportunity for the company to avoid bankruptcy and may allow creditors to receive some form of compensation for amounts owing to them by the company,” Mercator said in the statement.

Mercator’s unit Mercator Mineral Park Holdings filed for bankruptcy protection listing debt of as much as $500 million. It listed assets of less than $50,000 in a Chapter 11 petition filed overnight in U.S. Bankruptcy Court in Wilmington, Delaware.

Subsidiaries Mineral Park Inc., Bluefish Energy Corp. and Lodestrike Resources Ltd. also filed bankruptcy petitions in the same court. Mineral Park Inc., based in Golden Valley, Arizona, listed assets and debts of $100 million to $500 million in its filing. Mercator said today that Mineral Park Inc. will be sold separately.

MPI Sale

“The stand-alone sale of MPI would result in a recovery of less than 100 percent to the MPI lenders,” Mercator said. “The liabilities of the company pursuant to the parent guarantee in addition to its other liabilities have created a situation where Mercator is unable to meet its current and future obligations.”

The bankruptcy follows a failed takeover by Russian billionaire Mikhail Prokhorov’s Onexim Group, which said last month it won’t extend a deadline to complete the deal.

Mercator, based in Vancouver, announced in December that Onexim’s Intergeo MMC Ltd. would buy the company in a reverse takeover to gain a listing in Canada. Closing was delayed after Russian regulators requested more information on the deal. Mercator said July 15 that Intergeo wouldn’t agree to further delays.

Creditors of the Mercator unit with the largest unsecured claims include ME Elecmetal, with trade debt of $861,374, and UniSource Energy Services Inc., with trade debt of $592,881, according to the bankruptcy filing.

The case is In Re Mercator Mineral Park Holdings Ltd., 14-1198, U.S. Bankruptcy Court District of Delaware (Wilmington).

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