CEC announcement released to ASX at 5.55PM Friday night. There are as many questions as there are answers in here but my morning coffee fix in our crumbling CBD awaits for now!
Going ....... going .......
ASX ANNOUNCEMENT 8 April 2011
CEC GROUP LIMITED (CEG)
CEG Principal Financier Debt and Financial Position
Further to the company’s announcements on 27 January 2011, 31 January 2011 and 1 March 2011 the facility agreement that CEG has with its principal financier expired on 31 January 2011, and remains outside agreed terms on current finance terms of the present facilities.
CEG further advises that its interest rate hedge (ISDA Master Agreement) has now been terminated by its principal financier, on the basis of an alleged default, namely that CEG has "sought or become subject to the appointment of a receiver". CEG has not sought the appointment of a receiver, and to the best of the directors knowledge no receiver has been appointed.
Again, CEG advises that it continues to strive to carry out major transactions and achieve either the full payout of the principal financier, refinancing of the principal financiers debt or alternatively negotiate a level of debt pursuant to new facilities that the principal financier is comfortable to continue in the long term.
However, it is acknowledged that CEG has a limited time available to achieve these transactions, despite CEG having reduced the debt to the principal financier from approximately $168 million to approximately $64 million in an unfavourable economic environment. In that economic environment the principal financier has continued to penalise the company with high interest charges and continued repayment demands. These factors have severely damaged the businesses of the company and in turn severely damaged the capacity of the company to meet those high interest charges and debt reduction targets.
The adverse effect, together with the economic conditions in FNQ on CEG’s business has seen the collection of debtors has been slow, impacting on cash flow. This has led to a number of creditors being paid outside due terms, and several creditors have commenced recovery action. Trade creditors are demanding payment of overdue debts and have commenced recovery action against CEC Group Ltd:
In particular the debt outstanding to the Australian Tax Office by the holding company is in excess of $2.38 million as at March 2011 and the Queensland Office of State Revenue has obtained judgement against CEG in February 2011 for $1.115 million. Employee superannuation contributions remain outstanding from October 2009 and PAYG remittances remain outstanding form January 2010. On 31 January 2011 a creditor demanded a replacement property lease guarantee totaling $412,450 within 14 days, and on 1 March 2011 a creditor obtained a judgement against CEC Group Ltd for $200,000.
ASIC has been provided with correspondence from 13 creditors to CEC Group Ltd dated between 11 January and 16 February 2011 demanding payment of overdue debts totaling $125,991. On 15 February 200I a creditor demanded payment of a loan totaling $3,832,726 guaranteed by CEC Group Ltd this loan is secured by a first mortgage on large property. The creditor served a Statutory Demand on the company for $180,018 on 22 December 2010 for interest on the loan that was unsatisfied as at 15 February 2011 the company is engaged in discussions with the creditor while the property is being marketed for sale.
The Directors are presently considering how best to address these issues.
The Far North Queensland (‘FNQ’) region where CEG operates has been subject to recent natural disasters and has high unemployment rates. The directors of CEC Group Limited will continue to fight for the survival of the businesses of CEG cognizant that this in the best interests of the stakeholders including shareholders, creditors, employees and indeed the FNQ region.