Power Minerals (ASX: PNN) has “significantly advanced” the process to appoint a receiver over Ultra Lithium (TSX-V:ULT) to recover the full amount outstanding under a convertible loan agreement between the two companies.
Under the CLA, Ultra Lithium granted Power certain security interests to guarantee loan repayment, which are governed by Canadian law, and include a General Security Agreement over Ultra Lithium’s Canadian and Argentinian assets (GSA).
To enforce its rights and advance the appointment of a receiver over Ultra Lithium’s assets, Power has served a notice under the Bankruptcy and Insolvency Act (Canada). The notice is the next step that Power must take to enforce its rights under the GSA.
The s.244 notice is a precondition to making an application to the relevant court to obtain an order to appoint a receiver over Ultra Lithium’s assets.
Ultra Lithium’s share price was down 33.333% when it closed trade yesterday and is down 80% over the past year. The company had not released a statement at the time of going to press in relation to Power’s announcement.
Power Minerals says the notice has been served on Ultra Lithium by Norton Rose, Power’s Canada-based legal advisors. Norton Rose has also reportedly provided advice regarding Power’s rights under the GSA and engaging specialist insolvency advisors to act as the receiver.
Power is in the final stages of engaging a Canada-based insolvency firm to act as the receiver.
The notice states that Power must give 10 days’ notice of its intention to enforce a security interest prior to any taking any enforcement steps. Power may then make an application to the relevant court for orders to appoint a receiver.
As of today (20 November), the Ultra Lithium CLA debt totals just over $1.136 million.
This figure has grown since 16 July when Power confirmed issuing Ultra Lithium with a default notice demanding repayment of just over $1.102 million. No payment has been made since the issue of the default notice, according to Power Minerals.
Previously on 25 October 2023, Power secured a $150,000 part payment from Ultra Lithium. Power says it has continued to attempt to proactively engage with Ultra to settle the dispute, “however, no reasonable settlement proposals have been made by Ultra to date”.
Accordingly, Power has taken the essential initial steps towards appointing a receiver over Ultra Lithium’s assets.
“Power is committed to ensuring that its CLA rights are enforced and therefore securing the full repayment of the Ultra Lithium debt,” Power Minerals Managing Director Mena Habib says.
Write to Adam Orlando at Mining.com.au
Images: Power Minerals
