19 Feb 2015 07:00
Berkeley Mineral Resources PLC
("BMR" or the "Company")
£1.0 million Settlement Agreement
Investigation
The Company announced on 2 February 2015 that the Board anticipated that, in light of the investigation into the Company's affairs, the results for the year ended 30 June 2014 would incorporate write downs of assets in the range of £10 million to £12 million. This will facilitate completion of the audit for that year, and the write downs to be itemised and announced to shareholders in due course.
Settlement agreement
The Company announces today that on 16 February 2015 it entered into a settlement agreement (the "Settlement Agreement") relating to the matters underlying certain of these write downs of assets.
The parties to the Settlement Agreement with the Company comprise Masoud Alikhani (its former Chairman) via an interim deputy as explained below, Mrs Barbara Alikhani (wife of Masoud Alikhani), Said Alikhani (a brother of Masoud Alikhani), Alberg Mining & Minerals Exploration Limited (a vendor of assets sold to BMR), Dominion Energy PLC (a company in which Masoud Alikhani was interested), ESV Group PLC (a further company in which Masoud Alikhani was interested), Ms Anita Carr (a former contractor of BMR) and Swan Logistics Limited (a company controlled by Ms Anita Carr) (together, the "Settlement Parties"), and Heathley Limited (a company of which Masoud Alikhani's son is an authorised signatory).
Further to a series of medical opinions over recent months, Masoud Alikhani has been diagnosed with Alzheimer's
Disease. It was considered by doctors that Masoud Alikhani did not have the capacity/understanding to execute or deal with complex transactions and therefore his wife made an application to Court to have an independent person
consider the document and sign the Settlement Agreement on his behalf.
Under the Settlement Agreement:
· Mrs Alikhani paid to BMR on exchange of the agreement £960,000 in cash (the "Settlement Funds") and Heathley Limited waived repayment by BMR of a loan of £40,000;
· The Settlement Parties waived all of their rights under options and warrants exercisable over, in aggregate, 35,957,579 ordinary shares of BMR ("Ordinary Shares") (representing approximately 2.7 per cent of the current issued share capital);
· Masoud Alikhani (in respect of 9,350,000 Ordinary Shares), Mrs Barbara Alikhani (in respect of 2,656,578 Ordinary Shares) and Swan Logistics Limited (in respect of 12,472,798 Ordinary Shares) agreed to such shares (representing approximately 1.8 per cent of the current issued share capital) being converted into deferred shares at the next general meeting of BMR, such deferred shares having no economic or voting rights, and being de-listed from trading on the AIM Market, with lock-in provisions until such date;
· The Settlement Parties released and discharged, all and/or any actions, claims, demands, set-offs, rights (including the right to make complaint) whether in this jurisdiction or any other, whether under criminal or civil law, whether or not presently known to such signatories or to the law, and whether in law or equity, that it, or its related parties or any of them ever had, may have or hereafter can, shall or may have against the other signatories and/or their related parties relating to the aforementioned write down of certain of BMR assets; and
· Subject to regulatory or legal obligations from time-to-time, each of the parties to the Settlement Agreement is subject to confidentiality obligations and restrictive covenants.
The Directors believe that entering into the Settlement Agreement represented the most suitable course of action for the Company in the current circumstances. The Directors understand significant costs would be incurred in pursuing potential claims against the Settlement Parties, and recovery of any funds and receipt of any damages (and costs) awarded, even if successful, could not, based on the Directors' current understanding of the available assets of the Settlement Parties, be guaranteed.
Following protracted negotiations with the Settlement Parties, the Directors believe that the terms of the Settlement Agreement are fair and reasonable and result in the Company being credited with £1.0 million at a critical point for working capital sufficiency, resulting in a current cash balance of approximately £1.2 million. The Settlement Funds will facilitate completion of the audit for the year ended 30 June 2014 and will also enable the Company to progress with its plans for implementing the processing of its tailings assets at Kabwe in Zambia.
The Settlement Agreement represents a related party transaction in accordance with Rule 13 of the AIM Rules for Companies. Accordingly the Directors consider, having consulted with BMR's nominated adviser, that the terms of the Settlement Agreement are fair and reasonable insofar as its shareholders are concerned.
Following receipt of the Settlement Funds, the Company will proceed to finalise as soon as possible its accounts for the year ended 30 June 2014, which will include further information on the write down of assets. It is anticipated that the suspension imposed on trading of the Company's shares on the AIM Market will be lifted on publication of the accounts. A further announcement in this regard will be made in due course.
For further information:
Berkeley Mineral Resources PLC 020 7408 1181
Alex Borrelli, Chairman
WH Ireland Limited 020 7220 1666
Chris Fielding, Head of Corporate Finance