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29 Aug 2008 13:15
Pan Pacific Aggregates plc
Closure of Pumptown Quarry
Following the completion of Pan Pacific Aggregates plc's acquisition of Pumptown Quarry Inc. (the "Company") and CNI Equipment Ltd from Columbia National Investments Ltd ("CNI") announced on 11 June 2008, the Company has been in discussions with CNI relating to the closing reconciliation and transfer of certain equipment leases to the Company as set out in the Sales and Purchase Agreement. In the Sale and Purchase Agreement certain equipment leases were to be transferred to the Company on a free and clear basis.
Unfortunately this has not occurred and one of the lease providers, HSBC, has now served notice on the Company and PPA Equipment Ltd (formally known as CNI Equipment Ltd ) that they plan to seize the equipment at the quarry and resell it. The Company and Pan Pacific Aggregates plc is still trying to determine the extent of the outstanding liabilities, but understands that the immediate payment required by HSBC to forestall any action is in excess of $250,000, with a further requirement to enter into a new lease requiring a further security payment of $187,000, with monthly payments thereafter, plus the addition of Pan Pacific Aggregates plc as a guarantor of the leases.
The management of the Company has advised the Pan Pacific Aggregates plc board that the Company could not enter into 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 the Pumptown quarry is not safe for the heavy traffic required for quarry operation and will require total replacement. The estimated time for the erection of a single lane replacement bridge would be up to 12 - 18 months, which may require investment from the Company. Therefore with the prospect of no immediate income from the quarry the Company was unable to commit to the undertakings within the proposed HSBC agreement.
In order to protect the interests of the shareholders in Pan Pacific Aggregates plc our lawyers have served notice on CNI for certain breaches under the Sale and Purchase Agreement.
At present our lawyers are reviewing relevant documentation such as the master lease agreements to see if there are any solutions to the current position other than the seizure and sale of the leased equipment.
We have also asked our lawyers to provide the board of Pan Pacific Aggregates plc with a letter of advice on the options and likely consquences of the above events.
A further announcement will be made in due course.
Enquires:
Pan Pacific Aggregates plc
William Voaden Tel: 020 7096 9580
Hanson Westhouse Limited
Tim Metcalfe/ Bill Staple Tel: 020 7601 6100
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