-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HZR4qpiJSh4bUVQCApqC1PbBpf74XBDjX+U92HunAop6CU9BcJ2jCxg883LFVeOD pfj+gCFCEh0Ne81cBOpSNQ== 0000927356-99-001338.txt : 19990816 0000927356-99-001338.hdr.sgml : 19990816 ACCESSION NUMBER: 0000927356-99-001338 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLAS CORP CENTRAL INDEX KEY: 0000008302 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 135503312 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-02714 FILM NUMBER: 99688185 BUSINESS ADDRESS: STREET 1: 370 SEVENTEENTH ST STREET 2: STE 3140 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3036292440 MAIL ADDRESS: STREET 1: 370 SEVENTEENTH STREET STREET 2: STE 3150 CITY: DENVER STATE: CO ZIP: 80202 10QSB 1 FORM 10-QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB COMMISSION FILE NO. 1-2714 (Mark One) (X) Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1999 or ------------- ( ) Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _________ to ________ ATLAS CORPORATION -------------------------------------------- (Exact name of small business issuer as specified in its charter) DELAWARE 13-5503312 ------------------------------- ---------------- (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 370 Seventeenth Street, Suite 3140, Denver, CO 80202 ----------------------------------------------------- (Address of principal executive offices) (Zip Code) 303-629-2440 ------------------------------- (Issuer's telephone number) Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes X No ----- ----- As of August 11, 1999, 27,884,707 shares of Common Stock, par value $0.01 per share, were issued and outstanding. Transitional Small Business Disclosure Format (Check one): Yes No X ----- ------ Page 1 of 13 PART I. FINANCIAL INFORMATION Item 1. Financial Statements. -------------------- Atlas Corporation Consolidated Balance Sheets (in Thousands)
June 30, December 31, 1999 1998 - ------------------------------------------------------------------------------------------------------ (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 1,050 $ 4 Accounts receivable - trade 1,040 892 Title X receivable (Note 4) -- 675 Accounts receivable - other 208 352 Asset held for sale -- 2,643 Inventories 901 914 Prepaid expenses and other current assets 175 13 --------- --------- Total current assets 3,374 5,493 --------- --------- Property, plant and equipment 59,219 59,205 Less: accumulated depreciation, amortization and impairment (47,334) (47,032) --------- --------- 11,885 12,173 Restricted cash and securities (Note 4) 6,241 6,181 Title X receivable (Note 4) 14,232 14,109 Other assets 100 82 --------- --------- $ 35,832 $ 38,038 ========= ========= LIABILITIES Liabilities not subject to compromise: Current liabilities: Trade accounts payable $ 576 $ 980 Accrued liabilities 967 1,161 Short-term debt 2,447 3,233 --------- --------- Total current liabilities 3,990 5,374 --------- --------- Long-term debt 1,216 1,216 Other liabilities, long-term 447 3,512 --------- --------- Total long-term liabilities 1,663 4,728 Liabilities subject to compromise (Notes 4 and 5) 33,781 30,089 --------- --------- Total liabilities 39,433 40,191 --------- --------- Commitments and contingencies (Note 4) STOCKHOLDERS' DEFICIT Common stock 279 275 Capital in excess of par value 93,797 93,788 Deficit (97,678) (96,216) --------- --------- Total stockholders' deficit (3,601) (2,153) --------- --------- $ 35,832 $ 38,038 ========= ========= See notes to consolidated financial statements.
Page 2 of 13 Atlas Corporation Consolidated Statements of Operations (In Thousands, Except Per Share Data, Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------------------------ ----------------------------------- 1999 1998 1999 1998 - ----------------------------------------------------------------------------------------------------------------------------------- Mining revenue $ 942 $ 963 $ 1,702 $ 2,099 Costs and expenses: Production costs 1,019 831 1,705 1,804 Depreciation, depletion and amortization 277 227 562 427 Impairment of mineral property -- 34 -- 34 Shutdown and standby costs 79 88 178 163 General and administrative expenses 190 332 441 656 Exploration and prospecting costs 27 20 50 42 --------------- --------------- --------------- ---------------- Gross operating loss (650) (569) (1,234) (1,027) Other (income) and expense: Interest expense 68 137 164 296 Interest income (43) (80) (103) (154) Gain from joint venture agreement -- (188) -- (375) Loss on asset held for sale -- 474 -- 474 Other (5) (53) (37) (104) --------------- --------------- --------------- ---------------- Loss from continuing operations before reorganization items and income taxes (670) (859) (1,258) (1,164) Reorganization items: Legal fees (80) -- (195) -- Other (7) -- (9) -- --------------- --------------- --------------- ---------------- Loss before income taxes (757) (859) (1,462) (1,164) Provision for income taxes -- -- -- -- --------------- --------------- --------------- ---------------- Net loss $ (757) $ (859) $ (1,462) $ (1,164) =============== =============== =============== ================ Basic and diluted earnings per share of common stock: Net loss $ (0.03) $ (0.03) $ (0.05) $ (0.04) =============== =============== =============== ================ Average number of common shares outstanding 27,659 27,360 27,589 27,352 =============== =============== =============== ================
See notes to consolidated financial statements Page 3 of 13 Atlas Corporation Consolidated Statements of Cash Flows (In Thousands, Unaudited)
Six Months Ended June 30, -------------------------------------------- 1999 1998 - ---------------------------------------------------------------------------------------------------------- Operating activities: Net loss $ (1,462) $ (1,164) Add (deduct) non-cash items: Depreciation, depletion, amortization 562 464 Gain on joint venture agreement -- (375) Loss on asset held for sale -- 474 Other -- 34 Net change in non-cash items related to operations (Note 3) (134) (1,030) ------------------ ------------------ Cash used in continuing operations (1,034) (1,597) ------------------ ------------------ From discontinued operations: Change in estimated uranium reclamation costs 246 759 ------------------ ------------------ Cash provided by discontinued operations 246 759 ------------------ ------------------ Cash used in operating activities (788) (838) ------------------ ------------------ Investing activities: Additions to property, plant and equipment (344) (281) Proceeds from sale of equipment 70 1,674 Additions to restricted cash (250) -- Investment in asset held for sale -- (474) Proceeds from sale of asset held for sale 2,643 -- ------------------ ------------------ Cash provided by investing activities 2,119 919 ------------------ ------------------ Financing activities: Net repayment of short-term debt (285) (81) ------------------ ------------------ Cash used in financing activities (285) (81) ------------------ ------------------ Increase in cash and cash equivalents 1,046 -- Cash and cash equivalents: Beginning of period 4 583 ------------------ ------------------ End of period $ 1,050 $ 583 ================== ==================
See notes to consolidated financial statements. Page 4 of 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. There has not been any change in the significant accounting policies of Atlas Corporation and its subsidiaries (the "Company") for the periods presented. In the opinion of Management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results for these interim periods are not necessarily indicative of results for the entire year. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998. 2. On September 22, 1998, Atlas filed a petition for relief under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court for the District of Colorado. Under Chapter 11, certain claims against Atlas in existence prior to the filing of the petition for relief under the federal bankruptcy laws are stayed while Atlas continues business operations as debtor-in-possession. These claims are reflected in the June 30, 1999 and December 31, 1998 balance sheets as "Liabilities subject to compromise." Additional claims (Liabilities subject to compromise) may arise subsequent to the filing date resulting from rejection of executory contracts, including leases, and from the determination by the court (or agreed to by parties in interest) of allowed claims for contingencies and other disputed amounts. Claims secured against Atlas' assets also are stayed, although the holders of such claims have the right to move the Court for relief from stay. Secured claims are secured primarily by restricted cash of the Company and by performance bonds issued by insurance companies. Two of the Company's subsidiaries, Atlas Precious Metals Inc. ("APMI") and Atlas Gold Mining Inc. ("AGMI"), also filed for relief under Chapter 11 on January 26, 1999. Accordingly, liabilities associated with these subsidiaries have also been classified as Liabilities subject to compromise in the June 30, 1999 balance sheet. The Company's other subsidiaries, Arisur Inc. ("Arisur") and Suramco Metals, Inc. ("Suramco") have not filed for protection under Chapter 11 and there is no intention to do so. Accordingly, liabilities associated with these subsidiaries are included in "Liabilities not subject to compromise" along with secured and post-petition liabilities of the Company. Page 5 of 13 3. The components of the net change in items other than cash related to operating activities as reflected in the Consolidated Statements of Cash Flows are as follows:
Six Months Ended June 30, ------------------------------------------- 1999 1998 - -------------------------------------------------------------------------------------------------------- Add (deduct) items other than cash: Accounts receivable $ (4) $ (137) Inventories 13 (44) Prepaid expenses and other current assets (162) (6) Restricted cash 190 -- Other assets (18) 66 Trade accounts payable (165) (217) Accrued liabilities 13 (103) Other liabilities, long-term (1) (589) ------------------ ----------------- $ (134) $ (1,030) ================== =================
4. The Company is obligated to decommission and reclaim its uranium millsite (the "Millsite") located near Moab, Utah, which was permanently shut down in 1987 and estimated shutdown expenses and reclamation costs were accrued. Title X of "The Comprehensive National Energy Policy Act" ("Title X"), enacted in October 1992, provides for the reimbursement of past and future reclamation expenses related to uranium sites operated under Atomic Energy Commission contracts. The Company's uranium reclamation costs are subsidized by this government cost sharing program since 56% of its tailings were generated under government contracts. The total estimated reclamation liability ($20,804,000) and current and future Title X receivables ($14,232,000) are shown separately in the accompanying consolidated balance sheets leaving a net liability to the Company of $6,572,000 as of June 30, 1999. On April 28, 1999, the Company, along with the U.S. Nuclear Regulatory Commission ("NRC"), the State of Utah, ACSTAR (surety provider for Atlas) and others, executed the Moab Utah Millsite Transfer Agreement ("MUMTA'), which absolves the Company from all future liability with respect to the Millsite. The agreement, approved by the Bankruptcy Court on June 22, 1999, was reached to avoid lengthy and expensive litigation over the future of the Millsite. As consideration for this release, Atlas has agreed to contribute certain Millsite related assets to a Reclamation Trust to be controlled by the government. The assets include the remaining Title X receivable as of May 1, 1999, all future Title X receivables, Atlas' water rights and land at the Millsite and $5,250,000 of restricted cash. Elimination of the liability should coincide with confirmation of Atlas' plan of reorganization, but not later than December 31, 1999. Upon completion of MUMTA, management estimates that the Company will recognize a gain from the transaction of approximately $1.3 million. Page 6 of 13 5. Liabilities subject to compromise consist of the following at June 30, 1999 and December 31, 1998:
(in thousands) June 30, 1999 December 31, 1998 -------------------- --------------------- Accounts payable $ 1,726 $ 1,708 Accrued liabilities 1,691 1,592 Convertible debenture 3,500 3,500 Estimated uranium reclamation costs 20,804 1 20,945 1 Mine reclamation accruals 3,264 2 3,264 2 Other liabilities 2,797 2,809 -------------------- --------------------- $33,781 $33,818 ==================== =====================
1 See Note 4 above. 2 Fully secured by reclamation bonds of $3.264 million, which is in turn secured by $1 million of restricted cash. Page 7 of 13 Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations --------------------- "SAFE HARBOR" STATEMENT UNDER THE UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Statements which are not historical facts contained in this Form 10-QSB are forward looking statements that involve risks and uncertainties that could cause actual results to differ from projected results. Factors that could cause actual results to differ materially include, among others: general economic conditions, metal and mineral prices, political events in foreign countries, the risks associated with foreign operations generally, the timing of receipt of necessary governmental permits, climatic conditions, labor relations, availability and cost of material and equipment, the actual configuration of ore bodies, delays in anticipated start-up dates, environmental risks, the results of financing efforts and other risk factors detailed in the Company's Form 10-K and 8-K filed with the Securities and Exchange Commission. RECENT EVENTS On September 22, 1998, Atlas filed a petition for relief under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court for the District of Colorado. On January 26, 1999, APMI and AGMI also filed petitions for relief under Chapter 11. Under Chapter 11, certain claims against Atlas in existence prior to the filing of the petition are stayed while Atlas continues business operations as debtor-in-possession. Additional claims may arise subsequent to the filing date resulting from rejection of executory contracts, including leases, and from the determination by the court (or agreed to by parties in interest) of allowed claims for contingencies and other disputed amounts. Claims secured against Atlas' assets also are stayed, although the holders of such claims have the right to move the court for relief from stay. Secured claims are secured primarily by restricted cash of the Company and by performance bonds issued by insurance companies. Atlas does not intend to seek protection under any applicable bankruptcy laws for Arisur Inc., its wholly owned subsidiary. As discussed in footnote 4 to the Consolidated Financial Statements, the Company has reached an agreement with the NRC, the State of Utah, ACSTAR and others that absolves it from all future liability with respect to the Millsite. As consideration for this release, Atlas has agreed to contribute certain Millsite related assets to a Reclamation Trust to be controlled by the government. Elimination of this liability should coincide with confirmation of Atlas' plan of reorganization, but not later than December 31, 1999. On May 9, 1999, Arisur defaulted on a loan payment of $478,000 due under its loan agreement with Corporacion Andina de Fomento ("CAF"). Subsequently, by letter dated July 28, 1999, CAF has agreed to restructure the remaining balance of the debt under the following conditions: 1) that the Company demonstrates that it has the necessary funds (approximately $325,000) to finance and complete a diamond drilling program at the Andacaba mine in order to increase the level of proven reserves at the mine; 2) that a minimum of four years of proven reserves be verified by the drilling program; 3) that Atlas completes an agreement to subordinate its receivable from Arisur to CAF and; 4) that Page 8 of 13 certain security agreements between Arisur and CAF be perfected. In the event that the above conditions are met, CAF would be willing to restructure the existing debt over a 4 year period, which would include a principal grace period of 18 months. CAF has also agreed to consider additional financing to fund the development program at the Andacaba mine if the drilling program noted above shows proven reserves in excess of 5 years (see CAPITAL RESOURCE REQUIREMENTS, below). The Company continues to operate while it implements its plan for the reorganization of the Company. The primary focus of the plan is a release from any future liability associated with the Millsite (see above) and to seek financing for the development of its Andacaba Mine in order to increase operating cash flows (see above). Additionally, the Company is seeking to divest of its Gold Bar and Grassy Mountain properties and other non-core assets to generate additional cash for operations, and as partial satisfaction of its pre-petition liabilities. There is no guarantee that the Company will be successful in achieving all of the above reorganization goals or, if successful, that the creditors of the Company and the Bankruptcy Court will approve the plan as submitted on July 16, 1999. Management believes that successful completion of the aforementioned goals is necessary for the Company to avoid a Chapter 7 liquidation of all of the assets of the Company. CAPITAL RESOURCE REQUIREMENTS Bolivian operations The Company has developed an operating plan for its Andacaba mine involving a decline ramp to provide more efficient access to the orebody. This is expected to return the head grades to historical levels, and to significantly reduce unit costs. The Company also continues to evaluate the feasibility of the start-up of its Comali mill, which would require from $200,000 to $300,000 in capital improvements. The Company anticipates that funding for the decline ramp will be financed through a combination of internally generated funds, deferral of current loan payments and additional project financing from CAF (see RECENT EVENTS above), or other lending institution. Liquidity As of June 30, 1999, the working capital deficit was $616,000, which compares to positive working capital of $119,000 as of December 31, 1998. The Company's current ratio at June 30, 1999 was .85 to 1, compared to 1.02 to 1 at December 31, 1998. The decrease during the quarter is a result of capital expenditures of $344,000 and the operating loss during the period. The proceeds from the sale of Cornerstone have given the Company sufficient cash to fund its near term capital and operating needs. Longer-term capital requirements will be satisfied from project financing, future operating cash flows, placement of additional equity or debt and/or from the sale of other assets. Page 9 of 13 Results of operations The following is a summary of operating statistics at the Andacaba Mill for the three months and six months ended June 30, 1999 and 1998:
Period ended June 30, 1999 Period ended June 30, 1998 ---------------------------------- ------------------------------- Three months Six months Three months Six months --------------- -------------- ------------- ------------- Tonnes milled 30,523 60,467 28,793 55,089 Tonnes of lead concentrate produced 456 898 574 1,064 Tonnes of lead concentrate sold 602 1,053 639 1,053 Grade of lead concentrate: Lead 63.95% 63.88% 65.29% 64.87% Silver (ounces per tonne) 127.68 128.29 140.43 138.45 Tonnes of zinc concentrate produced 2,945 6,110 2,964 5,507 Tonnes of zinc concentrate sold 2,548 4,527 1,820 4,913 Grade of zinc concentrate: Zinc 45.38% 45.27% 46.35% 46.16% Silver (ounces per tonne) 24.70 24.25 25.51 25.71 Average price received: Lead (per tonne) $ 491 $ 505 $ 540 $ 546 Zinc (per tonne) $ 950 $ 952 $ 1,055 $ 1,089 Silver (per ounce) $ 5.01 $ 5.05 $ 6.24 $ 5.85
During the six months ended June 30, 1999, the Company had mining revenue of $1,702,000 compared to $2,099,000 in the same period of 1998. Average prices received during 1998 were significantly lower in 1999 than 1998 (see above). This fact, combined with the lower tonnes of zinc concentrate sold in 1999 resulted in the lower revenue for the period. During the quarter ended June 30, 1999 mining revenues were $942,000 compared to $963,000 for the same period in 1998. The higher zinc concentrate sales for the 1999-quarter were again offset by significantly lower prices in 1999, resulting in the decrease in revenue for the period. Cash production costs during the six months ended June 30, 1999 were $1,705,000, or $305 per tonne of concentrate sold. This compares to $1,804,000, or $302 per tonne of concentrate sold. For the quarter ended June 30, 1999, cash production costs were $1,019,000, or $323 per tonne of concentrate sold compared to $831,000, or $338 per tonne sold in the same period in 1998. Though overall operating costs are declining, these have been offset somewhat by increased management oversight costs during 1999. These higher costs are not expected to continue in the future. Shutdown and standby costs at Gold Bar were $79,000 and $178,000 during the three and six month periods ended June 30, 1999 compared to $88,000 and $163,000 for the comparable periods in 1998. The increase for the six month period is a result of the termination of the Page 10 of 13 Barrick joint venture agreement in December 1998. Certain holding costs were paid by Barrick in 1998 as part of the agreement, and paid by the Company in 1999. The Company has continued to reduce costs at the site resulting in the modest decrease for the three months ended June 30, 1999 compared to the same period in 1998. Exploration costs for the three and six month periods ending June 30, 1999 were $27,000 and $50,000 compared to $20,000 and $42,000 for the comparable periods in 1998. In 1998, certain costs were charged to Barrick, resulting in higher costs for 1999. General and administrative expenses for the three and six months ended June 30, 1999 were $190,000 and $441,000 compared to $332,000 and $656,000 for the comparable periods in 1998. The Company has continued its efforts to reduce such expenses. Legal fees were reduced from $160,000 for the six month period in 1998 to $38,000 in 1999 as several legal actions have been resolved or settled. As a result of staff reductions at the Company's headquarters, salaries and benefits have been reduced over this same period from $193,000 to $146,000. Accounting and auditing fees were also reduced in this time frame from $36,000 in 1998 to $24,000 in 1999. Similar reductions in legal fees, accounting fees and salaries account for the lower amount in the second quarter of these respective periods. Interest expense incurred during the three and six month periods ended June 30, 1999 was $68,000 and $164,000 compared to $137,000 and $296,000 for the same periods ended June 30, 1998. Interest accruals on all outstanding loans of Atlas and APMI have ceased as a result of filing for Chapter 11, explaining the decrease. During the six months ended June 30, 1999 and 1998, the Company incurred $344,000 and $281,000 in capital expenditures, respectively, substantially all of which related to the mining operation in Bolivia. Page 11 of 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings ----------------- None Item 2. Changes in Securities --------------------- None Item 3. Defaults upon Senior Securities ------------------------------- On May 12, 1999, the Company defaulted on a principal payment of $383,000, due under its loan agreement with Corporacion Andina de Fomento ("CAF"). The outstanding balance of the loan at June 30, 1999 was $1,917,000. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None Item 5. Other Information ----------------- None Item 6. Exhibits and Reports on Form 8-K -------------------------------- a. Exhibits 10.1 Moab Utah Millsite Transfer Agreement dated April 28, 1999 between Atlas Corporation, the Official Unsecured Creditors Committee, the NRC, the State of Utah and ACSTAR Insurance Companies. b. Reports on Form 8-K None Page 12 of 13 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ATLAS CORPORATION ----------------- (Registrant) By: /s/ James R. Jensen ------------------- James R. Jensen Chief Financial Officer Date: August 13, 1999 /s/ James R. Jensen --------------- ------------------- James R. Jensen Chief Financial Officer (Principal Financial Officer & Chief Accounting Officer) Page 13 of 13 EX-10.1 2 MOAB URANIUM MILLSITE TRANSFER AGREEMENT UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF COLORADO IN RE: ) ) ATLAS CORPORATION, ) Case No. 98-23331 DEC a Delaware corporation ) Chapter 11 EIN#: 15-5503312 ) ) ATLAS GOLD MINING INC., a Nevada Corp. ) Case No. 99-10889 DEC EIN#:84-1023843 ) Chapter 11 ) ATLAS PRECIOUS METALS INC., a Nevada ) Case No. 99-10890 SBB Corp., EIN#: 87-0400332 ) Chapter 11 ) Debtors. ) (Jointly Administered Under ) Case No. 98-23331 DEC) - -------------------------------------------------------------------------------- MOAB URANIUM MILLSITE TRANSFER AGREEMENT - -------------------------------------------------------------------------------- Atlas Corporation ("Atlas"), the Official Unsecured Creditors Committee (the "Committee"), Nuclear Regulatory Commission ("NRC"), the State of Utah ("Utah") and ACSTAR Insurance Companies ("ACSTAR"), for their Moab Uranium Mill and (Millsite) Transfer Agreement, hereby agree as follows: 1. Atlas filed its petition for relief under Chapter 11 of the Bankruptcy on September 22, 1998. Atlas Gold Mining Inc. and Atlas Precious Metals Inc. filed their petitions for relief under Chapter 11 of the Bankruptcy Code on January 26, 1999. Since the date of the filing of their petitions, the Debtors have been operating as Debtors in Possession. Atlas has filed its Plan of Reorganization on March 30,1999 with the United States Bankruptcy Court for the District of Colorado. The Definitions as contained in Article I of the Plan as filed are attached herein as Exhibit A and incorporated herein by reference. The references to Class numbers are to the March 30, 1999 Plan. 2. The Debtor, the Committee, NRC, Utah and ACSTAR, the issuer of the bonds securing the obligations of Atlas, have reached an agreement, subject to Court approval of this agreement and confirmation of a Plan of Reorganization consistent with the agreement, which resolves the issues raised regarding the Moab Millsite including the treatment of the claims of NRC, Utah and ACSTAR under the Plan of Reorganization. Such claims shall be treated in the plan as below stated: 3. Treatment of the Claims of the NRC and Utah: Page -1- A. The Allowed Claims of the N RC and Utah for Reclamation of the Moab, Utah Millsite shall consist of a separate impaired class under any Plan of Reorganization. The Class, currently designated as Class 4 under the Plan as filed, shall be comprised of any and all civil, administrative or bankruptcy claims of any kind or nature, whether filed, unfiled or to be accrued, known or unknown based upon any and all federal, state or municipal rules, regulations, statutes, license or permit requirements, whether now in existence or enacted in the future by the NRC and Utah, or any other entity with the same or similar claims with respect to any construction, operation, maintenance, possession, transfer and/or final reclamation, decommissioning, remediation or corrective action associated with facilities, roads, improvements and waste materials disposal and containment at the former uranium processing mill site owned by Atlas on the Moab land, or in any way related to the Mill or the Mill Operations. Atlas' Moab Cleanup Obligations are secured by bond number 5652 issued by ACSTAR in the amount of $6,500,000. B. A Reclamation Trust (Trust) shall be established by NRC, with concurrence from Atlas and the designated representative of Utah, on or before the Effective Date under the guidelines and regulations of NRC. The Reclamation Trustee shall be selected by NRC with the agreement of the designated representative of Utah. If NRC and Utah cannot reach agreement on the terms of the Trust or on the choice of the Trustee: 1. The Trust shall nonetheless be established, and the trust instrument establishing the Trust shall reflect all of those matters on which NRC and Utah can reach agreement; and 2. An Interim Trustee, selected by NRC, shall be appointed for a period not to exceed 180 days after the Effective Date; and 3. NRC and Utah shall continue to negotiate on those areas on which they cannot reach agreement; and 4. Once NRC and Utah reach agreement on matters on which they cannot presently agree, the trust instrument establishing the Trust shall be amended to reflect those subsequent agreements; and 5. Atlas shall transfer the monies and assets to the Trust on or before the Effective Date as are called for under this Moab Uranium Millsite Transfer Agreement, notwithstanding the possibility that the trust instrument establishing the Trust may be amended after the date of this agreement, after the date of the disclosure statement, or after the Effective Date; and 6. The assets transferred to the Trust under the terms of the Plan shall be held in compliance with the regulations and requirements of NRC as stipulated in a Modified License Transfer Order and shall be distributed or utilized in accordance with the regulations, Modified License Transfer Order requirements, and requirements or NRC as stipulated in a Modified License Transfer Order and relevant Trust documents according to the authority of the Reclamation Page -2- Trustee. C. On the Effective Date of the Plan, Atlas shall transfer to the Trust the following assets in full satisfaction of any and all claims of any kind and nature held by the Class: The transfer of all assets shall be by quit claim deed or the equivalent without any representations or warranties of any kind. 1. Title X Receivables for past claims; minus up to $675,000 which may be received from the Department of Energy in 1999; 2. 50% of any net recovery from collection of the disputed Title X claim for mill dismantling performed by American Reclamation and Dismantling Inc. (ARD Claim); 3. Any and all rights of Atlas' to Future Title X Receivables; 4. Atlas' Water Rights located at the Moab Land, listed as 6.3 cfs from the Colorado River, Grand County; Utah, Water Right No. 01-40, Application 30032, Certificate No. 60111; 5. Atlas' Possible Water Rights in the following: A. Water Right Number 01-1121 for 31 acre-feet, a segregation application from Water Right Number 01-40; B. Water Right Number 09-199 for 3.33 cfs in the San Juan River; C. Water Right Number 05-982 for .015 cfs for a well in the Monticello Mining District; D. Water Right Number 99-32 for .004 cfs from Seep Springs (approx. 4 miles from Fry Canyon). 6. Atlas' interest in that certain real property owned by Atlas and consisting of approximately 430 acres, located in Grand County, Utah together with all buildings, structures, improvements, appurtenances fixtures and easements, herein referred to as the "Moab Land"; 7. ACSTAR shall transfer the sum of $5,250,000 to the Reclamation Trust in full and complete satisfaction of the obligations under Bond #5652 and upon receipt of said payment, NRC shall provide to ACSTAR a full, final and complete discharge of all of ACSTAR's obligations at the Moab Site and ACSTAR's surety bond issued in connection therewith; the form Page -3- of said release to be mutually acceptable to NRC and ACSTAR; 8. Stock comprising two and one half percent (2.5%) of the stock of the Reorganized Atlas shall be issued to the Reclamation Trust; and 9. All records, documents, studies, data, and other information with respect to construction, operation, maintenance, reclamation, decommissioning, remediation or corrective action associated with facilities, roads, improvements and waste materials disposal and containment at the Moab Utah Millsite. The Reclamation Trust assumes the rights and privileges of Atlas with respect to those documents, studies, data and information. However, Atlas and/or its representatives shall retain the right of access, inspection and copying of said documents on an as needed basis. D. The Class claims shall be satisfied in full by the transfer of the stock and assets provided in this paragraph. NRC and Utah shall waive and release any and all civil, administrative or bankruptcy claims against Atlas, the Reorganized Atlas, and their officers, directors, employees, agents and representatives. Upon transfer of the assets to the Reclamation Trust, the Reclamation Trust shall assume the obligations of Atlas, in accordance with the terms of a Modified License Transfer Order to be entered into by NRC and the Reclamation Trustee on behalf of the Reclamation Trust, on or before the effective date of the Plan. The license issued to Atlas by the NRC relative to the Mill and Mill Operations shall either be terminated or transferred to the Reclamation Trust in accordance with the terms of the Modified License Transfer Order . Atlas obligations shall be limited to executing any and all documents necessary to effectuate the terms of the Plan. NRC and Utah shall release any and all claims to any remaining assets of Atlas, APMI and/or AGMI, including but not limited to any cash, mining properties, equity interest and/or potential insurance recoveries, except as to its rights as a shareholder of the Reorganized Atlas as referenced above. 4. Treatment of the Claims of ACSTAR: The allowed secured and unsecured claims of ACSTAR shall consist of a separate class, designated as Class 5 in the Plan, providing for specific, impaired treatment of its secured and contingent unsecured claims. A. A sub-class shall provide for the treatment of the ACSTAR secured claims. This Class claims shall be comprised of the Allowed Secured Claim of ACSTAR. ACSTAR has issued bonds to secure the environmental cleanup obligations of Atlas and certain of its subsidiaries including AGMI and APMI, including its obligations relating to the Moab Land, Mill and and other cleanup sites. ACSTAR shall be issued stock in the Reorganized Atlas comprising two and one half percent (2.5%) of the stock of the Reorganized Atlas in satisfaction of its satisfying the obligations under Bond #5652 to the Class 4 Claimants. The 2.5% stock interest shall be held in escrow by an escrow agent mutually acceptable to ACSTAR and the Reorganized Atlas. B. Allowed Unsecured Claims of ACSTAR. The ACSTAR claims against Page -4- Atlas, AGMI and APMI are cross-collateralized. ACSTAR has issued bonds to secured the cleanup obligations of Atlas, AGMI and APMI on properties other than the Moab, Utah site. The Class 5 Claimant shall have a claim for its actual losses in excess of the remaining security ACSTAR holds on the bonds not to exceed $500,000. For purposes of voting and determining feasibility the claim shall be estimated at $500,000. If the bonds issued by ACSTAR to secure the Cleanup Obligations at the Gold Bar Property is terminated without being called, ACSTAR's Allowed claim shall be $0 and its stock interest in the Reorganized Atlas shall be transferred to management, pursuant to the terms of a Management Compensation Program, to be contained in the Plan of Reorganization. Any and all cash then held in escrow in excess of the losses ACSTAR has then incurred, plus the face amount of the then remaining ACSTAR bonds, if any, shall be released to the Reorganized Atlas. ACSTAR shall retain its rights under the Colorado State Bank Escrow Account, currently containing $250,000 in proceeds from the sale of Cornerstone, pursuant to the previous Court Order approving the sale of Cornerstone, and the letter of credit posted to secure its bond obligations, unless said letters of credit have been called prior to the confirmation date in which case the rights shall attach to the cash proceeds from said letters of credit. Any claim of ACSTAR that its claims are entitled to treatment as an administrative expense, under any theory, and any potential claim against Arisur, shall be waived. 5. Upon Court approval of this Transfer Agreement, but prior to Confirmation of the Plan of Reorganization, ACSTAR shall be authorized to draw the letter of credit in the full amount of $5,425,000. Atlas will assist ACSTAR in obtaining the funds, or drawing on the letter of credit The Letter of Credit is fully secured by restricted cash currently being held by Merrill Lynch. The cash proceeds of the letter of credit along with any and all interest accruing on the cash shall be deposited in the escrow account established at Colorado State Bank, Denver, CO. Upon the effective date of the Plan or as provided in paragraph 11 below, whichever is applicable, $5,250,000 shall be paid over to the Trust from the escrow account. The balance shall be held and distributed in accordance with the terms reflected above regarding the treatment of the ACSTAR claim. 6. Atlas has filed a Plan which incorporates the terms of this agreement in their entirety. Atlas shall file separate Plans for Atlas Corporation, Atlas Precious Metals Inc. and Atlas Gold Mining Inc. and a consolidated Disclosure Statement for all three Debtor entities on or before April 30, 1999. The Plans shall each include an Effective Date for the Plan of thirty days after Confirmation of the Plans. 7. NRC, ACSTAR, and Utah agree to support and vote in favor of any Plan proposed by Atlas which incorporates the terms of this agreement in its entirety and any Plan of Atlas Precious Metals Inc. and Atlas Gold Mining Inc. which incorporates the Atlas Plan. 8. In addition, ACSTAR and the Unsecured Creditors Committee agrees to support and vote for a Plan of Reorganization for Atlas Precious Metals Inc. and Atlas Gold Mining Inc. that provides for Pro Rata treatment of any and all inter-company payables on par with any other general unsecured creditors. Page -5- 9. The Unsecured Creditors Committee agrees to support and vote for a Plan of Reorganization that incorporates this agreement in its entirety but reserves the right to object any other provisions of any Plan of Reorganization. 10. Upon Court approval of this agreement, it shall be binding on all parties to the agreement, and successors and assigns, including but not limited to a Chapter 11 or Chapter 7 Trustee appointed in any of the above captioned matters. All parties agree to take all steps reasonably necessary to effectuate the terms of this agreement and take no actions during the interim period in contravention of this agreement. 11. If a Plan of Reorganization, consistent with the terms of this agreement is not confirmed by December 31,1999 but an Order approving this agreement has been entered by the Court, the agreement as to the treatment of claims of NRC, Utah and ACSTAR shall still be binding on the parties. Atlas shall at that point in time, if a Plan has not been confirmed, transfer the above assets (refer to 3.C) to the Reclamation Trust, with the exception of the stock in the reorganized Debtor, in full satisfaction of any and all civil, administrative and bankruptcy claims as referenced above. Should a Plan of Reorganization be approved at a later date, Atlas shall at that time transfer the stock to ACSTAR and the Reclamation Trust as referenced above. Dated this 28th day of April, 1999. ATLAS CORPORATION ____________________________________ By:__________________________ ATLAS GOLD MINING INC. ____________________________________ By:__________________________ ATLAS PRECIOUS METALS INC. ____________________________________ By:__________________________ Page -6- ACSTAR INSURANCE COMPANIES ____________________________________ By :Henry Nosko, Jr. President Page -7- STATE OF UTAH ____________________________________ By:__________________________ Page -8- NUCLEAR REGULATORY COMMISSION ____________________________________ By:__________________________ Page -9- OFFICIAL UNSECURED CREDITORS COMMITTEE ____________________________________ By:__________________________ Page -10- AGREE AS TO FORM: SENDER & WASSERMAN, P.C. By:__________________________ Harvey Sender, #7546 Bonnie A. Bell, #14923 Daniel J. Garfield, # 1999 Broadway, Suite 2305 Denver, Colorado 80202 (303) 296-1999 Fax No. (303) 296-7600 E-mail: sender@sendwass.com ATTORNEYS FOR DEBTOR Page -11- BLOCK MARCUS WILLIAMS LLC By:__________________________ Howard R. Tallman, 10103 1700 Lincoln St., Suite 3550 Denver, CO 80203-1025 (303) 830-0800 Fax: (303) 830-0809 ATTORNEYS FOR OFFICIAL UNSECURED CREDITORS COMMITTEE Page -12- STATE OF UTAH By:__________________________ Denise Chancellor, Esq. Fred G. Nelson, Esq. Utah Attorney General's Office P.O. Box 140873 Salt Lake City, Utah 84114-0873 Page -13- LINDA A. McMAHAN UNITED STATES ATTORNEY By:____________________ Robert D. Clark, #8103 Assistant United States Attorney U.S. Department of Justice 1961 Stout Street, Suite 1100 Denver, CO 80294 (303) 844-3885 Page -14- KERR, FRIEDRICH, BROSSEAU, BARTLETT, P.C. By:__________________________ Dennis J. Bartlett, #14918 1600 Broadway, Suite 1360 Denver, Colorado 80202-4927 (303) 812-1200 ATTORNEYS FOR ACSTAR EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1999 MAR-01-1999 JUN-30-1999 1,050 0 1,248 0 901 3,374 59,219 (47,334) 35,832 3,990 0 0 0 279 (3,880) 35,832 942 985 1,296 1,592 82 0 68 (757) 0 (757) 0 0 0 (757) (.03) (.03)
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