Celsius Resources Ltd. said Equinaire Holdings Ltd. won a public auction for the Australian-listed company's 40-percent interest in Makilala Mining Company Inc. (MMCI), but stressed that the foreclosure sale remains subject to pending arbitration.
In an announcement dated Sept. 9, Celsius said Equinaire, a wholly owned subsidiary of Kiri Industries Ltd., conducted the auction on Sept. 8 for shares in MMCI held by Celsius subsidiary Makilala Holding Ltd. (MHL) and pledged as collateral under an Omnibus Loan and Security Agreement.
Equinaire submitted a $5.01 million credit bid and was declared the winning bidder after no other registered bidders attended and no competing bids were received, Celsius said.
Representatives of MHL attended the auction and put on record that the results of the foreclosure sale remain subject to the final determination of pending arbitration between MHL and Equinaire.
The dispute stems from Equinaire's purported assignment of the OLSA from Maharlika Investment Corp. to Equinaire. Celsius said Equinaire had issued notices alleging several events of default, including MHL's notice of relinquishment involving Sodor Inc., information-security incidents involving MMCI and MHL's efforts to obtain a Temporary Order of Protection from the Regional Trial Court of Makati.
Celsius said it disputes the occurrence and continuance of any event of default under the OLSA, as well as Equinaire's capacity to initiate foreclosure proceedings and sell MHL's interest in MMCI.
The company also maintains that the alleged defaults do not arise from the facts and, in any event, do not meet the contractual conditions required before enforcement rights can be exercised. Celsius said the alleged defaults should be referred to arbitration under the OLSA's dispute-resolution provisions.
The company said Equinaire would need to obtain a Certificate Authorizing Registration, or tax clearance, from the Bureau of Internal Revenue before it could register the transfer of MMCI shares with the Securities and Exchange Commission.
Celsius said the tax-clearance process typically takes at least 27 working days, or about six to eight weeks, giving it additional time to seek legal protection through a motion for reconsideration, a possible appeal to the Court of Appeals and interim arbitration orders.
Celsius said it intends to file a motion for reconsideration with the court. If unsuccessful, it plans to appeal to the Court of Appeals and, if necessary, the Supreme Court.
The company also said it would pursue arbitration to seek an injunction concerning the transfer of MMCI shares, challenge the alleged events of default and pursue damages against Equinaire.
Celsius said it would provide further updates in accordance with its continuous disclosure obligations.
