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29 Aug 2008 13:15
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Pan Pacific Aggregates plc
Closure ofΒ Pumptown Quarry
Following the completion ofΒ Pan Pacific Aggregates plc'sΒ acquisition of Pumptown Quarry Inc. (the "Company")Β and CNI Equipment LtdΒ from Columbia National Investments Ltd ("CNI") announced on 11Β June 2008, the Company has been in discussions withΒ CNIΒ relating to the closing reconciliation and transfer of certain equipment leasesΒ to the CompanyΒ asΒ set outΒ inΒ the Sales and PurchaseΒ Agreement. In theΒ SaleΒ and PurchaseΒ Agreement certain equipmentΒ leasesΒ wereΒ to be transferred to the Company on a free and clear basis.Β
Unfortunately this has notΒ occurredΒ and one of theΒ leaseΒ providers,Β HSBC,Β hasΒ nowΒ served notice on the Company and PPA Equipment Ltd (formally known as CNI EquipmentΒ LtdΒ )Β that they planΒ toΒ seizeΒ the equipment at the quarry andΒ resell it. TheΒ CompanyΒ and Pan Pacific Aggregates plcΒ is still trying to determine the extent of the outstanding liabilities, but understands that theΒ immediate payment required byΒ HSBC to forestall any action isΒ in excess ofΒ $250,000, withΒ a further requirement to enter into a new lease requiring a further security payment of $187,000,Β with monthly paymentsΒ thereafter, plus the addition ofΒ Pan Pacific Aggregates plcΒ as a guarantor of the leases.
TheΒ management of the Company has advisedΒ the Pan PacificΒ Aggregates plcΒ board that theΒ CompanyΒ could not enterΒ intoΒ this lease in good faith, as they had just received a report from the City of Abbotsford consultant engineers stating that the bridge to the only access road to theΒ PumptownΒ quarry isΒ not safe for the heavy traffic required for quarry operationΒ andΒ willΒ require total replacement. The estimatedΒ time for the erection of a single lane replacement bridge wouldΒ beΒ up to 12 - 18 months, which may require investment from the Company. Therefore with the prospect of noΒ immediateΒ income from the quarry theΒ CompanyΒ was unable to commit to theΒ undertakingsΒ within theΒ proposedΒ HSBC agreement.
In order to protect the interests ofΒ theΒ shareholders in Pan Pacific AggregatesΒ plc our lawyersΒ haveΒ servedΒ noticeΒ on CNI forΒ certainΒ breaches under theΒ SaleΒ and Purchase Agreement.
AtΒ present our lawyers areΒ reviewing relevant documentation such as the master lease agreementsΒ to see if there are any solutions to the current positionΒ other than the seizure and sale of the leased equipment.
We have also asked our lawyers to provide the boardΒ of Pan PacificΒ AggregatesΒ plcΒ with a letter of advice on the options andΒ likely consquences of the above events.
A further announcement will be madeΒ in due course.
Enquires:
Pan Pacific Aggregates plc
William Voaden Tel: 020 7096 9580
Hanson Westhouse Limited
Tim Metcalfe/Β Bill Staple Tel: 020 7601 6100
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