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Investors wondering what’s become of Quebec’s RB Energy may have been pleased to see an update from the company on Thursday. However, although the company now has a few confidential bids for its projects, its future still seems unsure.
In its release, RB states that it is continuing to operate under the protection of the Companies’ Creditors Arrangement Act as its stay of creditor proceedings has been extended from November 13, 2014 to April 30, 2015. Care and maintenance at its Quebec lithium plant is being funded through a US$13-million court-approved loan.
To give a quick refresher of the situation, RB Energy’s stock fell drastically in October when it failed to secure the financing it needed to keep operations going at its Quebec lithium plant. The company then halted operations at the plant, laid off most of its employees, filed for creditor protection and was delisted from the Toronto Stock Exchange.
On the OTC Pink, where RB is still listed, its stock has fallen 92 percent over the last year, and at close of day on Thursday, shares were down another 28 percent to just $0.02.
On the bright side, its Aguas Blancas iodine operations in Chile are continuing as normal, and the company is anticipating 1,100 to 1,200 tonnes of iodine production for 2015. That said, RB’s future still depends on its ability to sell all or part of either its Quebec lithium plant or Chilean iodine products and restructure its financial obligations.
The company has engaged Rothschild to help solicit bids for its projects, and has “received a number of [non-binding] LOIs” in that regard. Selected parties have been invited to put in their final offers, ideally by March 27. However, the nature of the court-approved sale and investor solicitation process requires that all bids remain confidential for now.
For his part, David Talbot of Dundee Securities believes things are still up in the air for the company. RB CEO Richard Clark told Lithium Investing News back in October that he had no plans to give up on the Quebec lithium plant. However, as Thursday’s release states and as Talbot reiterated, the company could still sell a partial or full interest in either or both of its projects.
RB Energy was not able to comment further regarding the update.
Furthermore, an email from Dundee points out that the value for investors would still be questionable even if the company were able to sell its Quebec plant. The firm believes that RB needs to pay approximately $230 million in liabilities, and with its assumed fire sale value of $200 to $250 million for the plant — less the need for a likely $50 to $100 million of capital — such a sale would “[leave] little if any value for shareholders (in-line with how RBI is priced in OTC market).” The firm does not give an estimate for the sale value of RB’s Chilean iodine operations in the email.
Certainly, it’s an interesting situation, and investors still following the company will be waiting to see what unfolds at the end of March.
Securities Disclosure: I, Teresa Matich, hold no investment interest in any of the companies mentioned.
