China set to grab Alita Resources

Bald Hill Image: Carla Gottgens/Bloomberg

Alita Resources, previously Alliance Mineral Assets, has announced its proposed deed of company arrangement (DoCA) discussions with China Hydrogen.

The lithium company  sought out proposals for a DoCA to restructure itself and its subsidiaries.

Alliance Mineral Assets Exploration, Tawana Resources, Lithco No. 2, Tawana Gold, Waba Holdings and Alita Resources were considering two proposals received from interested parties.

These include China Hydrogen Energy’s (CHE) proposal, which will deliver a superior outcome to creditors than the alternative DoCA proposal or liquidation.

A key condition to CHE’s proposal offers a full repayment to Galaxy Resources and asks Alita’s appointed managers to subsequently retire.

To this effect, Alita and its subsidiaries have entered into a binding $70 million loan facility agreement and related security arrangements with CHE.

Using a substantial amount of the funds, Alita repaid its outstanding debt with its secured creditor, Galaxy Resources on Friday.

After Galaxy Resources announced the outstanding loan of $US32.5 million ($48 million) had been repaid by Alita, they announced their proposed DoCA to Alita had been trumped by another third party offer.

Initially, the balance of CHE’s loan facility agreement, approximately $20 million, to draw down for working capital purposes, was available to utilise subject to CHE’s written consent.

Considering the company’s full repayment to Galaxy, the details of which third party proposal Alita accepted is unknown, or rather, if CHE renegotiated their initial terms.

Alita’s last announcement maintained that their discussions with CHE regarding the final terms of the DoCA proposal, were to finalise an unconditional DoCA proposal from CHE within the next two days.

The company plans to provide a report to creditors within two weeks with the details of the proposal accompanied by the outlook for unsecured credits and shareholders.

An application to the foreign investment review board is being considered by advisors if the Chinese proposal is adopted.

Meanwhile, the operations of the Alita Group will continue on a care and maintenance basis, with Galaxy now in zero debt.

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