Australia's Henry Walker Faces Administration - Sources 22 /12...

Australia's Henry Walker Faces Administration - Sources
22 /12 /2004 6:52PM

By Stephen Bell
Of DOW JONES NEWSWIRES


PERTH (Dow Jones)--Henry Walker Eltin Ltd. (HWE.AU) may go into administration as early as Thursday as the Australian mining contractor tries to resolve its financial problems, people familiar with the situation told Dow Jones Newswires.

With debts totaling around A$300 million, the company's future may be placed into the hands of accountants Korda Mentha at the behest of bank creditors, they said.

"An administrator will be appointed, but there is still a chance it may be able to trade out of its difficulties," one person said.

Switzerland-based commodities trader Glencore International AG will be having "high level talks with the administrator", the person added.

Henry Walker is a contractor for Glencore's part-owned Alpart bauxite and alumina operations in Jamaica. The struggling company also recently won a US$1.2 billion contract with PT Kaltim Prima Coal's proposed Bengalon mine in Indonesia, where Glencore has a coal marketing deal.

Henry Walker shares were placed on a trading halt Tuesday pending an announcement about a proposed recapitalization, which is expected to be unveiled prior to the start of trading Thursday. A Henry Walker spokeswoman had no comment when asked about the details of the impending statement.

Shares in Sydney-based Henry Walker last traded at 43 cents on Monday, valuing the company at about A$94 million, and less than half their value from late October when the company made a surprise profit warning amid the departure of chief executive Bruce James. The stock has traded as high as A$1.15 in the past 12 months.

Broker Deutsche Bank said that Henry Walker around A$50 million in bank debt, A$57 million in performance bonds and derivative exposure of A$17 million. It also has around A$170 million in U.S. private placement bonds.

The broker said Henry Walker's options appear to consist of short-term assistance to allow continuing operation or a fundamental restructure. "We think the latter is more likely and begin to wonder whether the banks may want exposure to overseas projects," Deutsche Bank said.

"The final whole process may even be some M&A solution," it added.

By Stephen Bell, Dow Jones Newswires; 61-8-9245-6408; [email protected]
-Edited by Ian Pemberton