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Key Highlights:
- BV2 has not received an outstanding payment of US$798,000 due by 21 November 2024 from Vanchem, which is part of the shareholder loan repayment.
- Dispute over kiln repair costs has led to an independent expert being appointed to assess the actual damages and adjust the deferred consideration.
- Joint Business Rescue Practitioners appointed to resolve the payment issue and seek legal advice for recovery of the owed amount.
Bushveld Minerals Limited (LSE:BMN), a prominent integrated primary vanadium producer, has provided an important update regarding a payment dispute with Vanchem, which forms part of the recent Vanchem sale transaction. The issue centers around an outstanding payment owed to Bushveld Vanadium 2 (Pty) Limited ("BV2"), a subsidiary of Bushveld Minerals and a former shareholder of Bushveld Vanchem (Pty) Limited ("Vanchem").
Outstanding Payment Issue
BV2 has yet to receive a payment of ZAR 14,438,093 (approximately US$798,000), which was due by 21 November 2024. This payment is a part-repayment of a shareholder loan owed by Vanchem to BV2, including accrued interest at a rate of 15% per annum, following the completion of the Vanchem sale on 7 November 2024.
The delay in receiving this payment is significant, and Bushveld Minerals has expressed concerns regarding the issue, with the next steps including further discussions with Vanchem to resolve the matter. The company is also seeking legal advice on the recovery of the owed amount.
Dispute Over Kiln Repair Costs
A separate issue has arisen in relation to the kiln repair costs incurred during the Vanchem disposal. As part of the sale, Southern Point Resources Fund I S.A. LP ("SPR") was deemed to have repaid ZAR 35 million (approximately US$1.9 million) due to unexpected kiln repair expenses and a period of non-production.
Bushveld Minerals disputes the quantum of this claim, and in order to resolve the issue, an independent expert will be appointed to assess the actual damages. Once the expert’s determination is finalized, any difference between the estimated and actual costs will be reflected in the deferred consideration still owed by Vanchem to Bushveld Minerals. This will either increase or decrease the amount of deferred consideration based on the expert’s findings.
Appointment of Joint Business Rescue Practitioners
In response to these challenges, Bushveld Minerals has appointed Piers Marsden and Jenna Osborne of Matuson & Associates as the Joint Business Rescue Practitioners (BRPs) for Bushveld Vametco Holdings (Pty) Limited, Bushveld Vametco Alloys (Pty) Limited, and Bushveld Minerals SA (Pty) Limited. The BRPs have already begun engaging with Vanchem to address the outstanding payment issue and to determine the next steps in resolving the dispute.
The company has made it clear that legal advice will be sought as part of efforts to recover the amount owed by Vanchem to BV2, and further action will be taken depending on the outcome of these discussions.
Use of Funds and Impact on BV2
Once the outstanding payment is received, BV2 plans to use the funds to make a part-payment towards an intercompany loan owed by BV2 to Bushveld Vametco Alloys (Pty) Limited ("BVA"). The loan is part of the ongoing financial structure within the Bushveld group, and the receipt of this payment is critical for ensuring that BV2 meets its obligations to BVA.
