Ashanti Goldfields Co, Africa's fourth-largest gold producer, said last night it might cease to operate if it failed to complete a plan to restructure its debts.
Ashanti's latest financial results include a clause about its ability to continue business as a "going concern", language used when accountants are concerned about the company's ability to maintain operations. The company almost went bankrupt in 1999 after taking wrong-way bets on gold prices.
The Ghanaian company, whose shares have more than doubled in the past year, has proposed that creditors swap $US54.6 million ($A103 million) worth of new shares for debt and exchange about three times that amount of debt for new securities that can be converted into Ashanti shares by June 2008 or repaid.
"This cautionary language is a technical disclosure," said Srinivasan Venkatakrishnan, Ashanti's chief financial officer, saying that lawyers had advised the company to include the statement in the release of year-end results.
"We intend to overcome that debt repayment issue by the proposed restructuring."
Ashanti made the statement as it reported a 2001 profit of $US62.7 million, or 56 US cents a share, against a loss of $US141 million, or $US1.25, the year before. The turnaround came in part because lower debts cut interest expenses. Production fell 4.7 per cent to 1.66 million ounces after it closed surface operations at some mines.
Ashanti shares rose as much as five cents, or 0.8 per cent, to 6.05 euros ($A10.00) in Germany and more than doubled in the past year. For now, Ashanti has borrowed money and secured agreements from banks that they would not demand additional collateral if its liabilities grew. Those debts start falling due at the end of this year, as do the conditions over collateral, creating the need for restructuring.
In exchange it will be granted a $US100 million line of credit.
While Ashanti's creditors have not objected to the proposal, the company said there were "a number of conditions" that had to be met.
"The above matters raise substantial doubt about the group's ability to continue as a going concern," Ashanti said in a statement released on London's Regulatory News Service.
Ashanti Goldfields Co, Africa's fourth-largest gold producer, said last night it might cease to operate if it failed to complete a plan to restructure its debts.
Ashanti's latest financial results include a clause about its ability to continue business as a "going concern", language used when accountants are concerned about the company's ability to maintain operations. The company almost went bankrupt in 1999 after taking wrong-way bets on gold prices.
The Ghanaian company, whose shares have more than doubled in the past year, has proposed that creditors swap $US54.6 million ($A103 million) worth of new shares for debt and exchange about three times that amount of debt for new securities that can be converted into Ashanti shares by June 2008 or repaid.
"This cautionary language is a technical disclosure," said Srinivasan Venkatakrishnan, Ashanti's chief financial officer, saying that lawyers had advised the company to include the statement in the release of year-end results.
"We intend to overcome that debt repayment issue by the proposed restructuring."
Ashanti made the statement as it reported a 2001 profit of $US62.7 million, or 56 US cents a share, against a loss of $US141 million, or $US1.25, the year before. The turnaround came in part because lower debts cut interest expenses. Production fell 4.7 per cent to 1.66 million ounces after it closed surface operations at some mines.
Ashanti shares rose as much as five cents, or 0.8 per cent, to 6.05 euros ($A10.00) in Germany and more than doubled in the past year. For now, Ashanti has borrowed money and secured agreements from banks that they would not demand additional collateral if its liabilities grew. Those debts start falling due at the end of this year, as do the conditions over collateral, creating the need for restructuring.
In exchange it will be granted a $US100 million line of credit.
While Ashanti's creditors have not objected to the proposal, the company said there were "a number of conditions" that had to be met.
"The above matters raise substantial doubt about the group's ability to continue as a going concern," Ashanti said in a statement released on London's Regulatory News Service.
