The directors of contract mining company Bounty Mining have called in administrators after cashflow problems crippled the company.
Martin Green and Peter Krejci of insolvency firm BRI Ferrier were appointed as administrators yesterday and have been charged with the task of trying to restructure the company.
Bounty, which specialising in coal mining services, has been hit by a series of problems over the last few months.
It lost its two main mining contracts in Queensland in early April and did not start a new contract in Chain Valley in New South Wales until May. A drop in income was compounded by a jump in costs associated with redundancies in Queensland and relocating staff to NSW.
According to a Green, recent “unscheduled machinery breakdowns” have further exacerbated the company’s cashflow crunch.
According to the company’s last quarter cashflow statement, Bounty had cashflow of negative $1.6 million in the three months ending 31 March.
Bounty raised just over $1 million from directors and “sophisticated” investors between May and June, but it would appear that cash has been used up.
Green’s immediate plan is to continue to operate the business as usual, while searching for someone to buy the business or inject the capital necessary to right the ship.
“The administrators are in discussions with Bounty’s bankers and are seeking their support to continue the business,” Green said in a statement.
“Expressions of interest are being sought from interested parties either to purchase the Bounty business as a going concern or recapitalise the existing business.”
The first creditors meeting will be help on 20 August. Any proposal or deed of company arrangement would be considered at a second creditors meeting on 14 September.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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