A $10-MILLION bridge loan from Maharlika Investment Corp. (MIC) has led to a disputed foreclosure that could transfer a 40-percent stake in the MCB Copper-Gold Project in Kalinga to an Indian company.
Equinaire Holdings Ltd., a wholly owned subsidiary of India-listed chemical manufacturer Kiri Industries Ltd., won the stake at a Sept. 8 foreclosure auction with an uncontested $5.01-million credit bid.
The shares belong to Makilala Holding Ltd. (MHL), a subsidiary of Australian-listed mining company Celsius Resources Ltd.
MHL owns 40 percent of Makilala Mining Company Inc. (MMCI), the Philippine firm developing the MCB project.
The cause of the dispute was the $10-million loan that MIC extended to MMCI to finance engineering design and feasibility studies for the project.
MIC, the government-owned corporation managing the Philippines’ first sovereign wealth fund, later transferred its rights as lender — including the loan’s collateral — to Equinaire.
After acquiring the loan, Equinaire alleged that several defaults had occurred and moved to foreclose on MHL’s 40-percent interest in MMCI.
One alleged default involved MHL’s notice terminating an agreement with Sodor Inc., which had committed to acquire a 60-percent stake in MMCI but allegedly failed to complete payment.
Equinaire also cited information-security incidents at MMCI and MHL’s court action seeking to stop the foreclosure.
Celsius rejected Equinaire’s claims, arguing that no valid and continuing default had occurred and that Equinaire had no right to seize the shares.
The Makati Regional Trial Court denied MHL’s request to suspend the foreclosure while the dispute was under arbitration.
However, the ruling did not determine whether a default had occurred, or whether Equinaire had the legal right to foreclose.
The court had initially granted temporary protection to MHL, but lifted it after Equinaire posted a P201-million counterbond, allowing the auction to proceed.
MHL attended the auction and said that its outcome remained subject to the arbitration ruling.
Kiri said its acquisition of the loan position supports its plan to secure a long-term supply of copper concentrate for a proposed project in India.
The broader ownership dispute also involves Philippine companies Sodor and PMR Holding Corp., as well as lawyer Julito “Sarge” Sarmiento.
Celsius has filed an Anti-Dummy Law complaint against Sarmiento over alleged corporate arrangements involving Kiri executives.
Separate disciplinary complaints have been filed against Sarmiento and other lawyers associated with Sarmiento Loriega Law.
The Securities and Exchange Commission has referred allegations of possible legal violations to the National Bureau of Investigation.
However, the referral is not a finding of wrongdoing, and none of the allegations has been established by a final judgment.
The arbitration and related court proceedings will ultimately determine whether Equinaire may legally acquire MHL’s 40-percent stake in the MCB project.
