Centerra Gold Inc. (TSX: CG) announced late Monday night that its wholly-owned subsidiaries Kumtor Gold Company and Kumtor Operating Company, which own and operate the Kumtor mine in Kyrgyzstan, have filed for bankruptcy to preserve their value.
The company said this move is meant to preempt any claims against the subsidiaries following the Government of the Kyrgyz Republic’s alleged seizure of the Kumtor mine.
According to Centerra, the Chapter 11 filings came after public statements by Kyrgyz officials indicated intentions to use spurious environmental and tax claims to place the subsidiary into some form of an insolvency procedure in the country, leading to a possible stripping of its assets.
“While these claims have not been asserted against Centerra itself, the actions of the Kyrgyz Government and others have compelled us to take steps to preserve the value of [the subsidiaries] for all our stakeholders,” said Centerra President & CEO Scott Perry.
The company further clarifies that the bankruptcy proceedings of its subsidiaries do not affect Centerra and its other areas of business. Kumtor Gold Company and Kumtor Operating Company are also both currently solvent, with total assets in excess of US$1.1 billion, and holds no external bank debt.
Centerra has also retained external advisors for its strategic review related to the Kumtor mine situation. The company said it is currently evaluating all possible alternatives “to preserve and enhance value for its stakeholders while ensuring that the Kyrgyz government does not directly or indirectly profit from its unlawful expropriation of the Kumtor mine.”
Centerra Gold Inc. last traded at $9.78 on the TSX.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.