<PAGE>
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 September 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 3010, 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 November 10, 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
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
--------------------
Atlas Corporation
Consolidated Balance Sheets
(in Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
- ------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 464 $ 4
Accounts receivable - trade 1,286 892
Title X receivable (Note 4) -- 675
Accounts receivable - other 151 352
Asset held for sale -- 2,643
Inventories 758 914
Prepaid expenses and other current assets 109 13
------------------ ------------------
Total current assets 2,768 5,493
------------------ ------------------
Property, plant and equipment 59,262 59,205
Less: accumulated depreciation, amortization and impairment (47,499) (47,032)
------------------ ------------------
11,763 12,173
Restricted cash and securities (Note 4) 6,241 6,181
Title X receivable (Note 4) 14,232 14,109
Other assets 166 82
------------------ ------------------
$ 35,170 $ 38,038
================== ==================
LIABILITIES
Liabilities not subject to compromise:
Current liabilities:
Trade accounts payable $ 546 $ 980
Accrued liabilities 1,167 1,161
Short-term debt 3,485 3,233
------------------ ------------------
Total current liabilities 5,198 5,374
------------------ ------------------
Long-term debt -- 1,216
Other liabilities, long-term 452 3,512
------------------ ------------------
Total long-term liabilities 452 4,728
Liabilities subject to compromise (Notes 4 and 5) 33,717 30,089
------------------ ------------------
Total liabilities 39,367 40,191
------------------ ------------------
Commitments and contingencies (Note 4)
STOCKHOLDERS' DEFICIT
Common stock 279 275
Capital in excess of par value 93,797 93,788
Deficit (98,273) (96,216)
------------------ ------------------
Total stockholders' deficit (4,197) (2,153)
------------------ ------------------
$ 35,170 $ 38,038
================== ==================
</TABLE>
See notes to consolidated financial statements.
Page 2 of 13
<PAGE>
Atlas Corporation
Consolidated Statements of Operations
(In Thousands, Except Per Share Data, Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------------ ------------------------------------
1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mining revenue $ 1,297 $ 1,394 $ 2,999 $ 3,493
Costs and expenses:
Production costs 1,178 1,257 2,883 3,061
Depreciation, depletion and amortization 272 275 834 702
Impairment of mineral property -- -- -- 34
Shutdown and standby costs 92 108 270 271
General and administrative expenses 169 291 610 943
Geological and land holding costs 36 18 86 60
--------------- --------------- --------------- ---------------
Gross operating loss (450) (555) (1,684) (1,582)
Other (income) and expense:
Interest expense 88 144 252 440
Interest income (10) (84) (113) (238)
Gain from joint venture agreement -- (188) -- (563)
Loss on asset held for sale -- 563 -- 1,037
Other (27) (15) (64) (119)
--------------- --------------- --------------- ---------------
Loss from continuing operations before
reorganization items and income taxes (501) (975) (1,759) (2,139)
Reorganization items:
Legal fees (88) (43) (283) (43)
Other (6) -- (15) --
--------------- --------------- --------------- ---------------
Loss before income taxes (595) (1,018) (2,057) (2,182)
Provision for income taxes -- -- -- --
--------------- --------------- --------------- ---------------
Net loss $ (595) $(1,018) $(2,057) $(2,182)
=============== =============== =============== ===============
Basic and diluted earnings per share of common stock:
Net loss $ (0.02) $ (0.04) $ (0.07) $ (0.08)
=============== =============== =============== ===============
Average number of common
shares outstanding 27,659 27,512 27,589 27,406
=============== =============== =============== ===============
</TABLE>
See notes to consolidated financial statements
Page 3 of 13
<PAGE>
Atlas Corporation
Consolidated Statements of Cash Flows
(In Thousands, Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------------------------------
1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating activities:
Net loss $(2,057) $(2,182)
Add (deduct) non-cash items:
Depreciation, depletion, amortization 834 741
Gain on joint venture agreement -- (563)
Loss on asset held for sale -- 1,037
Other -- 34
Net change in non-cash items
related to operations (Note 3) 16 (542)
----------------- ------------------
Cash used in continuing operations (1,207) (1,497)
----------------- ------------------
From discontinued operations:
Change in estimated uranium reclamation costs 162 563
----------------- ------------------
Cash used in operating activities before reorganization (1,045) (934)
items
----------------- ------------------
Investing activities:
Additions to property, plant and equipment (494) (379)
Proceeds from sale of equipment 70 1,674
Additions to restricted cash (250) --
Investment in asset held for sale -- (512)
Proceeds from sale of asset held for sale 2,643 --
----------------- ------------------
Cash provided by investing activities 1,969 783
----------------- ------------------
Financing activities:
Net repayment of short-term debt (1,005) (295)
Borrowings on short-term debt 541 250
----------------- ------------------
Cash used in financing activities (464) (45)
----------------- ------------------
Increase (decrease) in cash and cash equivalents 460 (196)
Cash and cash equivalents:
Beginning of period 4 583
----------------- ------------------
End of period $ 464 $ 387
================= ==================
</TABLE>
See notes to consolidated financial statements.
Page 4 of 13
<PAGE>
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 Corporation ("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 September 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
September 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
<PAGE>
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:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------------------------
1999 1998
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Add (deduct) items other than cash:
Accounts receivable $(193) $ 195
Inventories 156 10
Prepaid expenses and other current assets (96) (43)
Restricted cash 190 --
Other assets (84) 77
Trade accounts payable (194) (37)
Accrued liabilities 233 (130)
Other liabilities, long-term 4 (614)
------------------ -----------------
$ 16 $(542)
================== =================
</TABLE>
4. The Company was 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 ($20,720,000) 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 $6,488,000 as of September
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 absolved 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 $1.2 million.
Page 6 of 13
<PAGE>
5. Liabilities subject to compromise consisted of the following at September
30, 1999 and December 31, 1998:
<TABLE>
<CAPTION>
(in thousands) September 30, 1999 December 31, 1998
-------------------- ---------------------
<S> <C> <C>
Accounts payable $ 1,724 $ 1,486
Accrued liabilities 1,717 1,671
Convertible debenture 3,500 3,500
Estimated uranium reclamation costs 20,720 /1/ 21,110 /1/
Mine reclamation accruals 3,264 /2/ -- /2/
Other liabilities 2,792 2,322
-------------------- ---------------------
$33,717 $30,089
==================== =====================
</TABLE>
/1/ See Note 4 above.
/2/ Fully secured by reclamation bonds of $3.264 million, which is in turn
secured by approximately $1 million of restricted cash.
Page 7 of 13
<PAGE>
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 and revised on October 26, 1999, CAF has agreed to
restructure the remaining balance of the debt under the condition that the
Company, by June 30, 2000, can demonstrate that it has a minimum of four years
of proven reserves at a production rate of 400 tonnes per day at the Andacaba
mine. In the event that the above condition is 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.
Page 8 of 13
<PAGE>
In August 1999, the Company reached an agreement with Vengold, Inc.
("Vengold") giving Vengold the option to acquire 100% of 603 unpatented lode
claims and 6 patented lode claims at the Gold Bar property. Vengold is
obligated under the agreement to incur $200,000 in exploration costs on the
property by December 31, 2001. The Company will retain a 2% net smelter
royalty interest in the property if the option is exercised. Of the remaining
mining claims at Gold Bar, the Company has retained 53 unpatented claims as
well as the remaining patented land at the Gold Bar site for its own use. The
remaining claims on the Gold Bar property, comprising approximately 80% of the
entire claim block, were dropped on August 31, 1999 in order to avoid paying
the annual holding fees on the claims of approximately $260,000.
The Company continues to focus on implementation of its plan of 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 expand production at
its Andacaba Mine in order to increase operating cash flows (see above). The
Company is also pursuing claims for recovery of costs incurred at Moab from
the commercial general liability policies that it had during the years of
operation at the Millsite. 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.
On September 27, 1999, the Company mailed to the creditors and shareholders
("Parties in Interest") of the Company a proposed plan of reorganization (the
"Plan") and disclosure statement which, amongst other things, incorporated the
elements described above. The Parties in Interest had until October 22, 1999
to submit their vote to either accept or reject the Plan as proposed.
Concurrent with this process, the Company was negotiating with the Pension
Benefit Guaranty Corporation ("PBGC") to terminate its defined benefit pension
plan and for the PBGC to assume control of the pension plan. Since the
aforementioned negotiations were not yet complete at October 22, 1999, the
PBGC voted to reject the plan. As a substantial creditor of the Company, the
PBGC's vote is sufficient to block acceptance of the Plan. Subsequently, the
Company has entered into an agreement with the PBGC to terminate the pension
plan and to change the PBGC's vote to accept the Plan. The agreement is
subject to court approval, which is anticipated to coincide with the hearing
on confirmation of the Plan scheduled for December 1, 1999. The Company
anticipates that with this acceptance, the Plan will be confirmed by the
Bankruptcy Court at the hearing on December 1, 1999 and the Company will be
out of bankruptcy by January 2000.
There is no guarantee that the Company will be successful in completing the
reorganization process. 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 to expand its Andacaba mine to a
production level of 400 tonnes per day. This is expected to return the head
grades to
Page 9 of 13
<PAGE>
historical levels. 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 expansion will be financed
through a combination of internally generated funds and deferral of current
loan payments.
Liquidity
As of September 30, 1999, the Company's working capital deficit was
$2,430,000, which compares to positive working capital of $119,000 as of
December 31, 1998. The Company's current ratio at September 30, 1999 was .53
to 1, compared to 1.02 to 1 at December 31, 1998. The decrease during the
period is a result of the operating loss during the period, the
reclassification of the CAF loan to short-term debt due to the default noted
above, and capital expenditures of $494,000 during the nine months ended
September 30, 1999.
The proceeds from the sale of Cornerstone have given the Company sufficient
cash to fund its immediate operating needs. Longer-term capital requirements
will be satisfied from future operating cash flows, from the sale of Company
assets such as the Gold Bar and Grassy Mountain properties, recoveries of
insurance claims for costs incurred at Moab, and placement of additional
equity or debt as necessary.
Results of operations
The following is a summary of operating statistics at the Andacaba Mill for
the three months and nine months ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months ended September Nine Months ended September
30, 30,
-------------------------------- -------------------------------
1999 1998 1999 1998
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Tonnes milled 32,252 30,347 92,622 85,436
Tonnes of lead concentrate produced 488 658 1,387 1,722
Tonnes of lead concentrate sold 612 790 1,665 1,842
Grade of lead concentrate produced:
Lead 63.25% 64.46% 63.66% 64.84%
Silver (ounces per tonne) 107.59 136.32 120.99 137.64
Tonnes of zinc concentrate produced 3,153 3,258 9,245 8,766
Tonnes of zinc concentrate sold 3,895 3,627 8,422 8,540
Grade of zinc concentrate produced:
Zinc 46.52% 46.64% 45.69% 46.42%
Silver (ounces per tonne) 19.29 21.98 22.56 24.32
Average price received:
Lead (per tonne) $ 491 $ 570 $ 570 $ 556
Zinc (per tonne) $ 950 $ 1,044 $ 1,044 $ 1,070
Silver (per ounce) $ 5.01 $ 5.77 $ 5.77 $ 5.82
</TABLE>
Page 10 of 13
<PAGE>
During the nine months ended September 30, 1999, the Company had mining
revenue of $2,999,000 compared to $3,493,000 in the same period of 1998.
Average prices received were significantly lower in 1999 than 1998 (see
above). This fact, combined with the lower tonnes of zinc and lead concentrate
sold in 1999 resulted in the lower revenue for the period. During the quarter
ended September 30, 1999 mining revenues were $1,297,000 compared to
$1,394,000 for the same period in 1998. Higher tonnes of zinc concentrate sold
during the period was offset by lower sales of lead concentrate. The
significantly lower prices in 1999 were the primary reason for the decrease in
revenue for the period.
Cash production costs during the nine months ended September 30, 1999 were
$2,883,000, or $286 per tonne of concentrate sold. This compares to
$3,061,000, or $295 per tonne of concentrate sold for the same period in 1998.
For the quarter ended September 30, 1999, cash production costs were
$1,178,000, or $261 per tonne of concentrate sold compared to $1,257,000, or
$285 per tonne sold in the same period in 1998. The lower per tonne costs are
a result of operating cost reductions and efficiencies implemented at the end
of 1998 and early 1999.
Shutdown and standby costs at Gold Bar were $92,000 and $270,000 during the
three and nine month periods ended September 30, 1999 compared to $108,000 and
$271,000 for the comparable periods in 1998. The Company has continued to
reduce costs at the site resulting in the modest decrease for the three months
ended September 30, 1999 compared to the same period in 1998.
Geological costs for the three and nine-month periods ending September 30,
1999 were $36,000 and $86,000 compared to $18,000 and $60,000 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 nine months ended
September 30, 1999 were $169,000 and $610,000 compared to $291,000 and
$943,000 for the comparable periods in 1998. The Company has continued its
efforts to reduce such expenses. Legal fees were reduced from $240,000 for
the nine-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 $264,000 to $227,000. Accounting and auditing fees were also reduced in
this time frame from $53,000 in 1998 to $36,000 in 1999. Similar reductions
in legal fees, accounting fees and salaries account for the lower amounts in
the third quarter of these respective periods.
Interest expense incurred during the three and nine month periods ended
September 30, 1999 was $88,000 and $252,000 compared to $144,000 and $440,000
for the same periods ended September 30, 1998. Interest accruals on all
outstanding loans of Atlas and APMI have ceased as a result of filing for
Chapter 11, resulting in the decrease.
During the nine months ended September 30, 1999 and 1998, the Company incurred
$494,000 and $379,000 in capital expenditures, respectively, substantially all
of which related to the mining operation in Bolivia. These costs were
primarily for mine development expenditures at the mine.
Page 11 of 13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults upon Senior Securities
-------------------------------
None
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 Revised second amended joint disclosure statement of Atlas
Corporation, Atlas Gold Mining Inc. and Atlas Precious Metals
Inc.
10.2 Atlas Corporation's second amended plan of reorganization
10.3 Atlas Precious Metals Inc.'s second amended plan of
reorganization
10.4 Atlas Gold Mining Inc.'s second amended plan of
reorganization
b. Reports on Form 8-K
None
Page 12 of 13
<PAGE>
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: November 12, 1999 /s/ James R. Jensen
-----------------------------------
James R. Jensen
Chief Financial Officer
(Principal Financial Officer
& Chief Accounting Officer)
Page 13 of 13
<PAGE>
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)
________________________________________________________________________________
REVISED SECOND AMENDED JOINT DISCLOSURE STATEMENT OF ATLAS
CORPORATION, ATLAS GOLD MINING INC. AND ATLAS PRECIOUS METALS INC.
________________________________________________________________________________
Atlas Corporation, Atlas Gold Mining Inc. and Atlas Precious Metals Inc.,
Debtors in Possession, by and through their counsel Sender & Wasserman, P.C.,
proposes their Second Amended Joint Disclosure Statement (hereinafter referred
to as the "Disclosure Statement"). Atlas Corporation ("Atlas"), a Delaware
corporation, filed its Plan of Reorganization with the United States Bankruptcy
Court for the District of Colorado in the above-captioned proceeding on March
30, 1999 and filed its Amended Plan of Reorganization on July 16, 1999
(hereinafter "Atlas Plan of Reorganization" or "Atlas Plan"). Atlas Gold Mining
Inc., a Nevada corporation, ("AGMI") filed its Plan of Reorganization on April
15, 1999 and its Amended Plan of Reorganization on July 16, 1999, (hereinafter
"AGMI Plan of Reorganization" or "AGMI Plan"). Atlas Precious Metals Inc., a
Nevada corporation, ("APMI") filed its Plan of Reorganization on April 15, 1999
(hereinafter "APMI Plan of Reorganization" or "APMI Plan") and its Amended Plan
of Reorganization on July 16, 1999. The Chapter 11 proceedings of Atlas, AGMI
and APMI are jointly administered. A confirmation hearing has been scheduled
for NOVEMBER 5, 1999 at 9:00 a.m. in Courtroom A, U.S. Custom House, 721 - 19th
Street, Denver Colorado 80202-2508. Pursuant to the terms of the United States
Bankruptcy Code, this Second Amended Joint Disclosure Statement (hereinafter
"Disclosure Statement") has been presented to and approved by the Bankruptcy
Court. The approval of the Bankruptcy Court is required by statute but does not
constitute a judgment by the Court as to the desirability of the Plans of
Reorganization or as to the value or suitability of any consideration offered
thereby.
Atlas, AGMI and APMI have prepared this Disclosure Statement to disclose
that information which, in their opinion, is material, important and necessary
to an evaluation of the Plans of Reorganization. The material herein contained
is intended solely for that purpose and solely
<PAGE>
for the use of known creditors and interest holders of the Debtors, and,
accordingly may not be relied upon for any purpose other than determination of
how to vote on the Plans of Reorganization.
THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.
ELIGIBILITY TO VOTE ON ATLAS PLAN
---------------------------------
A CREDITOR OR INTEREST HOLDER OF ATLAS ASSERTING A CLAIM IN ORDER TO
VOTE ON THE PLAN OF REORGANIZATION, MUST HAVE FILED A PROOF OF CLAIM OR INTEREST
IN THE ATLAS CASE AT OR PRIOR TO JANUARY 15, 1999, UNLESS SCHEDULED BY THE
DEBTOR AS NOT DISPUTED, LIQUIDATED AND NOT CONTINGENT OR SUBJECT TO SEPARATE
COURT ORDER. ANY CREDITOR SCHEDULED AS NOT DISPUTED, LIQUIDATED AND NOT
CONTINGENT IS, TO THE EXTENT SCHEDULED, DEEMED TO HAVE FILED A CLAIM, AND,
ABSENT OBJECTION, SUCH CLAIM IS DEEMED ALLOWED. YOU ARE ADVISED TO REFER TO THE
SCHEDULES ON FILE WITH THE CLERK OF THE BANKRUPTCY COURT TO DETERMINE THE EXTENT
TO WHICH YOUR CLAIM IS SCHEDULED AND IF IT IS DISPUTED, UNLIQUIDATED OR
CONTINGENT. A CREDITOR OR INTEREST HOLDER OF ATLAS MAY VOTE TO ACCEPT OR REJECT
THE PLAN OF REORGANIZATION BY FILLING OUT AND MAILING THE BALLOT WHICH IS
PROVIDED WITH THIS DISCLOSURE STATEMENT TO THE ATTORNEYS FOR THE DEBTOR, SENDER
& WASSERMAN, P.C., 1999 BROADWAY, SUITE 2305, DENVER, COLORADO 80202. ONLY
CREDITORS AND INTEREST HOLDERS OF ATLAS MAY VOTE ON THE ATLAS PLAN
ELIGIBILITY TO VOTE ON AGMI AND APMI PLANS
------------------------------------------
A CREDITOR OR INTEREST HOLDER OF AGMI AND/OR APMI ASSERTING A CLAIM
IN ORDER TO VOTE ON THE PLAN OF REORGANIZATION, MUST HAVE FILED A PROOF OF CLAIM
OR INTEREST AT OR PRIOR TO APRIL 30, 1999, AGAINST AGMI AND APMI RESPECTIVELY,
UNLESS SCHEDULED BY THE DEBTOR(S) AS NOT DISPUTED, LIQUIDATED AND NOT CONTINGENT
OR SUBJECT TO SEPARATE COURT ORDER. ANY CREDITOR SCHEDULED AS NOT DISPUTED,
LIQUIDATED AND NOT CONTINGENT IS, TO THE EXTENT SCHEDULED, DEEMED TO HAVE FILED
A CLAIM, AND, ABSENT OBJECTION, SUCH CLAIM IS DEEMED ALLOWED. YOU ARE ADVISED TO
REFER TO THE SCHEDULES ON FILE WITH THE CLERK OF THE BANKRUPTCY COURT TO
DETERMINE THE EXTENT TO WHICH YOUR CLAIM IS SCHEDULED AND IF IT IS DISPUTED,
UNLIQUIDATED OR CONTINGENT. A CREDITOR OR INTEREST HOLDER MAY VOTE TO ACCEPT OR
REJECT THE PLAN OF REORGANIZATION BY FILLING OUT AND MAILING THE BALLOT WHICH IS
PROVIDED WITH THIS DISCLOSURE STATEMENT TO THE ATTORNEYS FOR THE DEBTOR, SENDER
& WASSERMAN, P.C., 1999 BROADWAY,
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SUITE 2305, DENVER, COLORADO 80202. ONLY CREDITORS OF AGMI MAY VOTE ON THE AGMI
PLAN. ONLY CREDITORS OF APMI MAY VOTE ON THE APMI PLAN.
The Court has fixed October 22, 1999 at 5:00 p.m. as the last date by
which ballots must be delivered to Sender & Wasserman, P.C. No vote received
after such time will be counted. Whether a creditor or interest holder of
Atlas, AGMI or APMI votes or not, such person will be bound by the terms and
treatment set forth in the respective plan if the plan is accepted by the
requisite majorities of classes of creditors and interest holders and/or is
confirmed by the Court. Absent some affirmative act constituting a vote, such
creditor or interest holder will not be included in the tally. Allowance of a
claim or interest for voting purposes does not necessarily mean that all or a
portion of the claim or interest will be allowed or disallowed for distribution
purposes.
In order for the Atlas Plan, the AGMI Plan and the APMI Plan to be
accepted by creditors, a majority in number and a two-thirds majority in amount
of claims filed or deemed allowed of each class of creditors under each plan
must vote to accept the plan. For purposes of determining whether the requisite
majorities are achieved, the computation will be based upon the total number of
claims or interests actually voting rather than on the total number of claims
approved and allowed. The votes will be tallied separately for each Debtor to
determine if the standards for confirmation have been met. Thus it is possible
that the creditors of one estate may vote to accept its Plan and the creditors
of another may vote to reject its Plan. You are, therefore, urged to fill in,
date, sign and promptly mail the enclosed ballot. Please be sure to properly
complete the form and legibly identify the name of the claimant or interest
holder.
The Debtors or others may solicit your vote. The cost of any
solicitation by the Debtors will be borne by the respective Debtor. No
representative of the Debtor shall receive any additional compensation for any
solicitation.
No representations concerning the Debtors or the Plans of
Reorganization are authorized by the Debtors other than as set forth in this
Disclosure Statement.
Certain of the materials contained in this Disclosure Statement are
taken directly from other readily accessible instruments or are digests of other
instruments. While the Debtors have made every effort to retain the meaning of
such other instruments, any reliance on the contents of such other instruments
should depend on a thorough review of the instruments themselves.
________________________________________________________________________________
PLEASE SEE TABLE OF CONTENTS LOCATED IN FRONT OF EXHIBITS
________________________________________________________________________________
1. DEFINITIONS
All capitalized terms used herein shall have the respective meanings set
forth below or otherwise assigned in the Plan. All other terms shall have the
meanings assigned to such terms in the Bankruptcy Code or the Bankruptcy Rules,
or if none, by common usage.
"ACSTAR" shall mean ACSTAR Insurance Company. ACSTAR has issued bonds to
secure the Moab Cleanup Obligation and the other Cleanup Obligations of Atlas
and certain of its subsidiaries.
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"ACSTAR Bonds" shall mean Bond #6149 for the Carter Raymond property, Bond
#6039, #6876 and Bond #6907 for the Grassy Mountain property, Bonds #5659, #5660
and #5661 for the Gold Bar property, and any other bonds issued by ACSTAR for
the benefit of Atlas, AGMI or APMI, except those bonds defined as the ACSTAR
Moab Bonds, having a collective face amount of $1,790,000 and $5,675,000 (less
approximately $189,000) held in an escrow account for the benefit of ACSTAR with
Colorado State Bank as the escrow agent (the "Escrow Fund"). The security for
the ACSTAR Bonds and the ACSTAR Moab Bond are cross-collateralized and represent
joint and several obligations of Atlas, APMI and AGMI.
"ACSTAR Moab Bond" shall mean Bond #5652 for the Moab Utah Site Cleanup
Obligations in the face amount of $6,500,000 and secured by the Escrow Fund.
The security for the ACSTAR Bonds and the ACSTAR Moab Bond is the same and are
cross-collateralized and constitute joint and several obligations of Atlas, APMI
and AGMI.
"Administrative Expense" shall mean any cost or expense of administration
of Chapter 11 allowed under 11 U.S.C. (S) 503(b) of the Code.
"Affiliate" shall mean any entity affiliated with the respective Debtors
pursuant to 11 U.S.C. (S) 101(2).
"AGMI" shall mean Atlas Gold Mining Inc., a Nevada corporation, the Chapter
11 Debtor under Case No. 99-10889 DEC.
"AGMI Plan" shall mean the Plan of Reorganization, as amended, submitted by
the Debtor, Atlas Gold Mining Inc.
"Allowed Claim" shall mean (a) an unsecured claim against the respective
Debtor(s) which is set forth in the respective Debtor's schedules other than an
unsecured claim against the respective Debtor(s) scheduled by the Debtor as
disputed, contingent or unliquidated; (b) an unsecured claim against the
respective Debtor which has been filed pursuant to 11 U.S.C. (S) 501, and with
respect to which no objection to the allowance thereof has been interposed
within sixty (60) days after the Effective Date, or as to which any objection
has been determined by Final Order; provided however, that interest which would
have accrued on or after September 22, 1998, in the case of Atlas or January 26,
1999 in the cases of APMI and AGMI shall not be a part of any Allowed Claim.
Allowed Claims may include, but are not limited to, claims that arise from the
rejection of executory contracts.
"Allowed Secured Claim" shall mean an Allowed Claim secured by property of
the respective Debtors.
"American Reclamation and Dismantling Receivable" or "ARD Claim" shall mean
a claimed receivable of Atlas, for reimbursement of $560,000 filed with the
Department of Energy and not approved to date, representing 56% of the amount
expended by Atlas and reimbursable pursuant to
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Title X of Pub. L. 102-486, Title X, (S) 1001, Oct. 24, 1992, 106 Stat. 2946,
codified at 42 U.S.C. (S) 2296(a).
"APMI" shall mean Atlas Precious Metals Inc., a Nevada corporation, the
Chapter 11 Debtor under Case No. 99-10890 SBB.
"APMI Plan" shall mean the Plan of Reorganization, as amended, submitted by
the Debtor, Atlas Precious Metals Inc.
"Arisur" shall mean Arisur Inc., a Grand Cayman corporation which is a
wholly owned subsidiary of Atlas, and which operates lead, zinc and silver
mines in Bolivia.
"Atlas" shall mean Atlas Corporation, a Delaware corporation, the Chapter
11 Debtor under Case No. 98-23331 DEC.
"Atlas Plan" shall mean the Plan of Reorganization, as amended, submitted
by the Debtor, Atlas.
"Bankruptcy Case" shall mean the Chapter 11 cases of Atlas, AGMI and/or
APMI pending in the United States Bankruptcy Court for the District of Colorado.
"Bankruptcy Code" or "Code" shall mean Title II of the Bankruptcy Reform
Act of 1978, 11 U.S.C. (S)(S) 101, et seq., as amended.
"Bar Date", except as otherwise ordered by the Court, with respect to Atlas
shall mean January 15, 1999 and with respect to AGMI and APMI shall mean April
30, 1999.
"Chapter 11" shall mean Chapter 11 of the Code.
"CAF" shall mean Corporacion Andina de Fomenta.
"CGL Claims" shall mean any and all rights held by Atlas for recovery from
or on account of any comprehensive general liability insurance policies.
"Claim" shall mean a claim against the respective Debtors as defined in 11
U.S.C. (S) 101(5).
"Companies" shall unless otherwise indicated mean Atlas, AGMI and APMI.
"Confirmation" shall mean the entry by the Court of an order confirming the
Plan in accordance with Chapter 11 of the Code.
"Contested Claim" shall mean any Claim which has been scheduled by the
respective Debtors as disputed, contingent, or unliquidated or any Claim as to
which an objection to the allowance thereof has been or will be filed within
sixty (60) days after the Effective Date regardless of whether the Claim was
scheduled as disputed, contingent or unliquidated by the Debtor. Contested
Claims
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shall be treated under the provisions of Article X of the Plan until
allowance or disallowance of such claim has been determined by a Final Order.
Contested claims include claims which the Debtor believes should be objected to
in whole or in part. Contested claims further include any claims held by
creditors against whom the respective Debtors believe actions may be brought
under Sections 544, 547, 548 or 549 of the Bankruptcy Code.
"Cornerstone" shall mean Cornerstone Industrial Minerals Corporation
formerly known as Phoenix Financial Holdings Inc., a company in which Atlas held
a sixty-one percent (61%) interest prior to the sale of its interest which
closed in February 1999.
"Court" shall mean the United States District Court for the District of
Colorado in Bankruptcy.
"Creditors Committee" shall mean the Official Unsecured Creditors Committee
appointed by the United States Trustee.
"Gerald E. Davis" or "Davis" shall mean the former officer and director of
Atlas, and former officer of AGMI and APMI who was the defendant in Adversary
Case No. 99-1122 MSK captioned Atlas Corporation, Atlas Gold Mining Inc., and
Atlas Precious Metals, Inc. v. Gerald E. Davis.
"Davis Collateral" shall mean that property described below in which a
security interest was granted in a portion of the Gold Bar property, under the
Settlement Agreement between the Atlas Parties and Davis dated July 9, 1999,
approved by Order of the Bankruptcy Court:
Section 27, T22 N-R 49 E. MDM, situated in the Roberts Mountain Mining
District, Eureka County, Nevada,
Patented Millsite Claims Mineral Survey # Patent # Acres
-------------------------- ---------------- ---------- -----
AM 108 5005 27-89-0038 5.0
AM 109 5005 27-89-0038 5.0
AM 115 5005 27-89-0038 5.0
AM 116 5005 27-89-0038 5.0
AM 117 5005 27-89-0038 5.0
together with all of the equipment, books and records related to the above
described property. The property subject to said security interests shall
include the Mill Building, Mill equipment, and other fixtures in the Mill
Building, including the attached refinery located on the patented Millsite
claims described above.
"Debtor" and "Debtor-in-Possession" shall mean Atlas in relation to the
Atlas case, AGMI with respect to the AGMI case and APMI with respect to the APMI
case. To avoid confusion, the Debtors shall be referred to as Atlas, AGMI and
APMI except where it is clear which entity is referred to.
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"Disclosure Statement" shall mean this consolidated disclosure statement
describing the Atlas Plan, the AGMI Plan and the APMI Plan, approved by the
Court, and distributed to the various classes as provided in 11 U.S.C. (S) 1125.
"Effective Date"shall mean the first business day following thirty (30)
days after the date the order confirming the Plans becomes a Final Order.
"Escrow Fund" shall mean the $5,675,000 (less approximately $189,000) held
in an escrow account for the benefit of ACSTAR with Colorado State Bank as the
escrow agent.
"Final Order" shall mean an order or a judgment as to which the time to
appeal or seek review or rehearing has expired. In the event that an appeal or
petition for rehearing is filed, an order or judgment shall be final unless an
order enters granting a stay pending appeal or petition for rehearing.
"Future Title X Receivables" shall mean those sums which accrue in the name
of Atlas or the Reclamation Trust, subsequent to the Effective Date of the Atlas
Plan from the Department of Energy under the provisions of 42 U.S.C. 2296a.
"Gold Bar property" shall mean the gold resource, mill facilities and any
other real and personal property located on the gold mining property located in
Eureka County, Nevada commonly referred to as Gold Bar, owned by AGMI and APMI.
"Grassy Mountain property" shall mean the gold mining project is located in
northern Malheur County, Oregon, approximately 22 miles southwest of Vale,
Oregon, commonly referred to as Grassy Mountain.
-
"Insider" means any entity defined in 11 U.S.C. (S) 101(31)(B).
"Interim Reclamation Trustee" shall mean the person or entity selected by
the NRC to serve as trustee of the Reclamation Trust for a period not to exceed
180 days after the Effective Date in the event that the NRC and Utah cannot
agree on the choice of the Reclamation Trustee.
"Late Filed Claims" shall mean any claim filed in the Atlas Bankruptcy Case
after January 15, 1999 or in the AGMI and APMI Bankruptcy Cases after April 30,
1999, except as otherwise ordered by the Court.
"Management Compensation Plan" shall mean the compensation plan formed in
accordance with Article XI of this Plan to compensate current key management and
employees for their efforts in reorganizing Atlas and to facilitate the orderly
transition to future management, as may be required.
"Mill" or "Moab Uranium Mill" shall mean the former uranium processing mill
which was dismantled and previously located on the Moab Land.
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"Mill Operations" shall mean the prior operations of the Mill.
"Moab Cleanup Obligation" shall mean any obligation of Atlas under the Moab
License or under any federal, state or municipal rules, regulations or statutes
to pay for or perform any remediation or cleanup at the Moab Utah Site.
"Moab Land", "Moab Utah Millsite" and "Moab Utah Site" shall mean 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.
"Moab License" shall mean Source Material License SUA-917.
"Moab Uranium Millsite Transfer Agreement" or "MUMTA" shall mean that
certain Agreement negotiated between Atlas, the Creditors Committee, the NRC,
the State of Utah and ACSTAR approved by Order of the Bankruptcy Court dated
June 22, 1999.
"Modified License Transfer Order" shall mean that Order entered by the NRC
providing for the transfer of the assets of the Moab Utah Site under the terms
of this Plan and the Moab Uranium Millsite Transfer Agreement.
"NRC" shall mean the United States Nuclear Regulatory Commission, an agency
of the federal government having jurisdiction over the Moab Utah Site.
"Other Cleanup Obligations" shall mean any obligation of Atlas, APMI or
AGMI under any federal, state or municipal rules, regulations or statutes to pay
for or perform any remediation or cleanup at any location other than the Moab
Utah Site which is currently or in the past been owned or operated, including,
but not limited to, the Carter Raymond, Gold Bar and Grassy Mountain properties.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Post-petition" with respect to Atlas shall mean anytime on or subsequent
to September 22, 1998 and with respect to AGMI and/or APMI anytime on or
subsequent to January 26, 1999.
"Pre-petition" with respect to Atlas shall mean anytime prior to September
22, 1998 and with respect to AGMI and/or APMI anytime prior to January 26, 1999.
"Pro Rata" shall mean with respect to any claimant, the percentage which
the Allowed Claim of a creditor bears to the sum of all Allowed Claims in the
same class as such Allowed Claim.
"Reclamation Trust" shall mean the trust to be formed pursuant to paragraph
4.3 of the Atlas Plan under the guidelines and regulations of the NRC in
compliance with the consent and approval of the NRC.
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"Reclamation Trustee" shall mean the person or entity selected by the NRC
with the agreement of the designated representative of Utah, on or before the
Effective Date.
"Reorganized Atlas" shall mean the reorganized Atlas under the confirmed
Atlas Plan.
"Reorganized AGMI" shall mean the reorganized Atlas Gold Mining Inc. under
the confirmed AGMI Plan.
"Reorganized APMI" shall mean the reorganized Atlas Precious Metals Inc.
under the confirmed APMI Plan.
"Retiree Medical Plan" shall mean that Medical Plan issued for the benefit
of retirees of Atlas.
"Shipes Parties" shall mean Harold R. Shipes, Eileen Shipes, Danielle N.
Shipes, John A. McKinney, Lynette R. McKinney, Raymond S. Birch, Rochelle M.
Birch, Herbert E. Dunham, Ana M. Dunham, Alexandra McKinney, Justin S. Birch,
Ashley McKinney, Tyler Birch, H. Edward Dunham, P. Brian Dunham, Rachel A.
Dunham, Elizabeth M. Dunham, Suramco Holdings, Inc. who have agreed to treatment
as Class 10 and Class 12 creditors under the terms of the Settlement Agreement
dated January 1999, approved by the Bankruptcy Court, which closed on or about
March 25, 1999.
"Stock Incentive Plan" shall mean that plan which may be established in
accordance with Article XI of this Atlas Plan as a future incentive to future
management pursuant to which management may receive stock or earn stock as a
performance bonus.
"Title X Receivables for Past Claims" shall mean the sum of $552,000 which
accrued to Atlas prior to the Effective Date of the Plan from the Department of
Energy under the provisions of Pub. L. 102-486, Title X, (S) 1001, Oct. 24,
1992, 106 Stat. 2946, codified at 42 U.S.C. (S) 2296(a), ("Title X") including
pre-petition and post petition claims, regardless of approval of the claims by
the Department of Energy, exclusive of up to $675,000 anticipated to be received
by Atlas prior to confirmation, and exclusive of the ARD Claim.
"Uranium Tailings Pile" shall mean the tailings pile of approximately 10.5
million tons impounded on the Moab Land.
"Utah" shall mean the State of Utah.
"Vengold Agreement" shall mean that certain Option and Acquisition
Agreement dated August 27, 1999 between Atlas, AGMI, APMI and Vengold, Inc.,
pertaining to certain of the mining claims at Gold Bar.
"Water Rights" shall mean Atlas' rights to water 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. 6111 and possible water rights in the
following: (a) Water Right Number 01-1121
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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; and (d)
Water Right Number 99-32 for .004 cfs from Seep Springs (approx. 4 miles from
Fry Canyon).
II. NATURE AND HISTORY OF OPERATIONS
A. FORMATION OF DEBTORS AND DEVELOPMENT OF BUSINESS
1. FORMATION OF ATLAS CORPORATION
Atlas is principally engaged in the exploration, development and
exploitation of mineral properties. Atlas was incorporated under the laws of
the State of Delaware on October 31, 1936. The principal office of Atlas is
located at Republic Plaza, 370 Seventeenth Street, Suite 3140, Denver, Colorado,
80202. The Company holds 100% ownership of three subsidiaries, one of which
also has a wholly owned subsidiary: (i) APMI, incorporated under the laws of the
State of Nevada, which holds the Grassy Mountain property and the exploration
portion of the Gold Bar property and which owns 100% of AGMI, incorporated under
the laws of the State of Nevada, which holds the mineral reserves and other
assets and infrastructure at the Gold Bar property, (ii) Arisur Inc. ("Arisur"),
a Grand Cayman corporation, which owns and operates mines in Bolivia, South
America through a Bolivian Branch, (iii) and Suramco Metals, Inc. ("Suramco").
Suramco originally owned 50 percent of Arisur. Suramco is presently a shell
corporation which holds no assets or liabilities and does not transact business.
In February 1999 Atlas sold its 61% ownership of Cornerstone formerly known as
Phoenix Financial Holdings Inc.
Since its inception in the 1920s, Atlas has owned a number of subsidiaries
which were engaged in business in a number of industries, including the airline,
hotel, and oil and gas industries. Atlas was formed as an investment company and
operated as such until 1961 when it notified the Securities Exchange Commission
that it was no longer an investment company but rather became operational.
Atlas owned a number of subsidiaries engaged in diversified industries until
1987 when it sold the last of its divisions unrelated to mining and became a
natural resources company primarily engaged in gold mining. The history which
is relevant to the Plan and the Debtors' operations include their mining
interests in lead, zinc, silver, asbestos, uranium, gold and other minerals.
Moab Utah Site
--------------
Atlas acquired the Moab Utah Site in 1962 when it purchased Uranium
Reduction Company. In the late 1940's, a uranium boom occurred on the Colorado
Plateau in the Four Corners area where Colorado, Utah, New Mexico, and Arizona
meet, including Moab. By 1956, over 600 producers were shipping ore from the
Four Corners for the exclusive use of the Atomic Energy Commission ("AEC"). To
meet this demand, the Uranium Reduction Company (the "URC") constructed the Moab
Uranium Mill (located 2.5 miles northwest of Moab,) in 1956 under license and
direction from the Atomic Energy Commission ("AEC"). Atlas Corporation
purchased the Moab Uranium Mill in 1962 and formed a division, Atlas Minerals to
operate the site. A uranium tailings pile was placed at its current location
pursuant to AEC direction. AEC also used the Moab Uranium Mill
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extensively to "pilot test" processing improvements; the wastes from these
operations were also deposited in the tailings pile. Between 1956 and 1970, the
Mill processed over 5.9 million tons of uranium ore for the AEC and, at its
peak, processed 1.8 million tons per year. The Moab Uranium Mill produced
uranium and vanadium concentrates until Atlas placed it on standby in March 1984
due to a depressed uranium market. Atlas closed the Moab Uranium Mill, in 1987.
Atlas worked diligently with the NRC and other government agencies from the
1970's to obtain approval to reclaim the site in accordance with relevant NRC
regulations. Unfortunately, prior to the filing of the petitions, and despite
Atlas' best efforts, the process of reclamation at the site was thwarted since
the early 1990's as Atlas and the NRC have attempted to deal with the concerns
of Utah, the United States National Parks Service, the United States Department
of the Interior, the Environmental Protection Agency ("EPA"), the United States
Fish and Wildlife Service, environmentalists, and residents. Atlas tried to
expedite this process and at every juncture cooperated with the NRC and provided
all interested parties with its plans, studies, and related correspondence to
clean up the site in accordance with applicable NRC regulations. The final plan
approval from the NRC was not obtained prior to filing of the petition to
provide Atlas with the requisite license amendment for final reclamation to
proceed. The reclamation of the Moab Utah Site has been eliminated pursuant to
the terms of the Moab Uranium Millsite Transfer Agreement to be discussed
further in this Disclosure Statement.
Asbestos
--------
In 1961, as part of the acquisition of Hidden Splendor Mining Company,
Atlas became the owner of an asbestos property near Coalinga, Fresno County,
California. Atlas constructed an asbestos processing facility in late 1962 and
operated the mines and mill until December 1967, when it sold 100% of its
asbestos interests. In 1988, the EPA named Atlas a responsible party to a
cleanup action under the Comprehensive Environmental Response and Compensation
Liability Act ("CERCLA"). From 1992 until the filing of the petition, Atlas
participated in the CERCLA cleanup with the U.S. Bureau of Land Management and
another private entity that has since been succeeded by TRW, Inc. Atlas and TRW,
Inc., comprised the official Atlas Mine Site Committee responsible for the
remedial action which was designed by Harding Lawson Associates.
Gold Mining
-----------
Atlas commenced its gold exploration and mining operations in the early
1980s. Mining commenced at the Gold Bar property in 1987. By 1989 Atlas was
primarily a gold mining company. Atlas has conducted exploration throughout the
world and acquired and divested of many mineral properties.
2. ATLAS PRECIOUS METALS INC.
APMI is a Nevada corporation which is a wholly owned subsidiary of Atlas.
APMI was incorporated in 1984. APMI owns the gold property located in northern
Malheur County, Oregon, referred to as Grassy Mountain. APMI also owns and
leases the surrounding land for the gold mining project at Gold Bar property
located in Eureka County, Nevada. APMI owns one hundred
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percent of the stock of AGMI. AGMI is a Nevada corporation incorporated in 1986.
AGMI owns and leases the mine and mill on the Gold Bar property. APMI acquired
the Grassy Mountain Project in 1986 and the Gold Bar property in 1986 from
Atlas.
Grassy Mountain Property
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APMI acquired its interests in the Grassy Mountain property in 1986 by
executing the Sherry and Yates lease and option to purchase, which is described
in the Unexpired Leases section of this Disclosure Statement.
Location
The Grassy Mountain project is located in northern Malheur County, Oregon,
approximately 22 miles southwest of Vale, Oregon. The property is accessed by
traveling four miles west from Vale on U.S. Highway 20, then south on the Twin
Springs County Road for 23 miles.
Property
The Grassy Mountain property encompasses approximately 6.7 square miles.
APMI owns certain unpatented lode claims. Approximately 1,000 acres of fee
surface, 240 acres of fee surface and minerals, and 80 acres of fee minerals are
held under two lease/option agreements.
Mineralization
Mineralization is associated with a low-grade gold siliceous hot springs
system with enrichment along multi-stage quartz-adularia veins and favorable
lithologies. Explosive brecciation and overpressuring of the rock, common in
these systems, was minimized due to the un-lithified nature of the sediments.
The mineralized rock is highly silicified and locally brecciated in the vicinity
of the feeder structures. As silicification decreases so does grade. Away from
the feeder zones lithology also plays an important role in gold deposition. The
finer grained siltstones contain the bulk of the lower grade material. The
higher grades are found in the coarser arkosic sandstones. The feeder or vein
zones contain grades as high as 20 ounces of gold/ton ("oz. Au/t").
History
There was no significant mining or major mineral occurrence known in the
area prior to APMI's acquisition of the Grassy Mountain project in 1986.
Detailed mapping and sampling were completed in 1986 and several drill
targets were defined. APMI completed 388 drill holes for a total of
approximately 221,500 feet on the property.
Newmont Grassy Mountain Corporation ("Newmont"), a wholly owned subsidiary
of Newmont Exploration Company leased the property from APMI in September, 1992
and continued property evaluation through August, 1994 completing an additional
13 core and reverse circulation holes.
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In September 1996 APMI executed an agreement with Newmont, (the
"Reconveyance Agreement"), which provided for the reconveyance of the Grassy
Mountain property to APMI. Pursuant to the Reconveyance Agreement, APMI paid an
amount of $206,000 to Newmont, issued a $500,000 unsecured, non-interest-bearing
promissory note (originally due September 18, 1997, but subsequently extended,
then defaulted) and assumed bonding requirements for exploration reclamation of
approximately $146,000.
On January 9, 1998 APMI signed an option agreement with Tombstone
Explorations Company Ltd. ("Tombstone"), granting to Tombstone an exclusive
option to purchase 100% of the Grassy Mountain property for $4 million. The
payments were to be made over four years approximating $1 million each year.
Under the terms of the agreement, Tombstone had the right to accelerate the
purchase by paying a total of $3.5 million to APMI by February 2000. Tombstone
had designed a two-phase drill program comprised of 15 drillholes (approximately
10,000 feet) and only completed a portion of the program. On July 15, 1998,
Tombstone terminated its option and returned 100% of the property to APMI.
Exploration work during Tombstone's program at Grassy Mountain included
8,500 feet of reverse circulation and core drilling in ten drillholes.
Tombstone completed an extensive review of previous work at the property and
commissioned an economic review and scoping study by Pincock Allen & Holt
("PA&H"). The 1997 review indicated the potential for the existing resource to
be economically recoverable through underground mining methods. The review also
concluded that significant additional exploration potential exists to identify
additional high grade and bulk mineable low grade deposits.
Reserves
As part of a detailed feasibility study conducted by Kilborn SNC-Lavalin,
Inc. ("Kilborn") in 1990, PA&H developed an open pit mine model. The
feasibility study resulted in the definition of a mineable reserve of 996,000
ounces at a $350 gold price from 16 million tons at grades 0.062 oz. Au/t of
mill and heap leach ores. Neither the recovered silver nor low-grade leach ores
were considered. The contained silver is approximately 2,467,000 ounces.
PA&H completed a feasibility study in 1990. The database utilized for this
study consisted of 180 drill holes in the main deposit area. The drilling is
predominantly vertical and angle reverse circulation rotary drill holes with
some core holes. Using a 0.02 oz. Au/t cutoff, PA&H calculated a geologic
resource of 17,217,000 tons at a grade of 0.061 oz. Au/t for a total of
1,051,500 ounces and 2,610,000 ounces of contained silver.
Environmental Reclamation Claims
There are contingent environmental cleanup claims to the State of Oregon,
Department of Geology and Mineral Industries associated with the Grassy Mountain
property. The reclamation claims involve regrading and reseeding the portions
of the property disturbed by drilling. The amount of any claims has not been
determined. ACSTAR Bond number 6907 in the amount of
-13-
<PAGE>
$146,200 has been posted to secure APMI's liabilities. APMI believes that the
actual claim is substantially less than the amount of the bond.
Project Status
APMI is evaluating whether the Grassy Mountain property should be sold.
In February 1999, APMI and Atlas contracted with Geographe International MFS
Inc. ("Geographe") to find a purchaser for this property. The agency agreement
with Geographe was approved by the Court on March 24, 1999. The engagement fee
of $25,000 has been paid as well as three monthly retainers totaling $30,000.
During the period ending July 12, 1999, Atlas paid expenses only. Having failed
to elicit an acceptable offer, the Geographe agreement was terminated. The fact
that gold prices are at twenty year lows has precluded a great deal of interest
in the Grassy Mountain property. The annual cost of maintaining the portion of
Grassy Mountain which APMI considers to be the core asset is $20,000. The
annual cost of holding the entire property is $50,000 per year. APMI projects
that the Grassy Mountain property will be held until the year 2001 at which
point it will be sold.
Underground Study
Two underground feasibility studies were commissioned to evaluate 200 tons
per day ("tpd") and 1,000 tpd production options by Kilborn and Dynatec Mining
Corporation, respectively. The 200-tpd study indicated diluted mineable
reserves of 131,000 tons at a grade of 1.132 oz. Au/t for 149,000 contained
ounces. The second, larger scale underground study at 1,000 tpd used an 0.08
oz. Au/t cutoff and identifies diluted mineable reserves as 1.9 million tons at
a grade of 0.262 oz. Au/t for 497,000 contained ounces.
Exploration
An additional resource was drilled out approximately 1 mile west of the
main deposit. The Crabgrass target contains a near surface geologic resource at
a 0.02 oz. Au/t cutoff of 24,000 ounces contained in 600,000 tons grading 0.038
oz. Au/t. Several drilled and undrilled areas within the Grassy Mountain claim
block have potential for additional resources.
3. GOLD BAR MINE
AGMI owns the gold mill and other infrastructure on the gold mining
property located in Eureka County, Nevada referred to as Gold Bar. The
surrounding land for the Gold Bar property was once owned or leased by APMI. In
1984 Atlas acquired portions of what is today known as Gold Bar. Throughout
1986-1995 APMI acquired its interests in Gold Bar through execution of leases,
location of unpatented mining claims and purchase of unpatented mining claims.
In 1986, the assets at Gold Bar acquired by Atlas were conveyed to AGMI and APMI
and certain assets acquired by APMI were conveyed to AGMI.
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<PAGE>
Location
The Gold Bar property is located in and adjacent to the Roberts Mountains
in Eureka County, Nevada. The area is reached by traveling 22 miles west of
Eureka, Nevada, on U.S. Highway No. 50 and 17 miles northeast along the Three
Bars Road.
Property
The Gold Bar property at one time encompassed approximately 100 square
miles. Presently, AGMI owns the fee land on which the gold mill and other
infrastructure are located. In addition there are tailings located on land
owned by AGMI. There are 55 unpatented lode-mining claims which APMI owns.
Additionally, Vengold, Inc., as discussed herein, has acquired an option on 603
claims. Effective September 1, 1999, the bulk of the Gold Bar property was
allowed to expire.
Geology
All of the mineralization found occurs as sediment-hosted "Carlin-type"
deposits. These deposits are hosted in carbonate-rich sedimentary rocks of the
Devonian Nevada Formation. Mineralization is characterized by micron-size gold
and a distinct hydrothermal alteration suite of the decalcification and
silicification. Gold mineralization and alteration are characteristically
enriched in the trace elements and minor silver.
History
In 1983, focused reconnaissance along the southern Roberts Mountains
identified widespread hydrothermal alteration with anomalous gold geochemistry
along the western range front. Since then, APMI discovered five gold deposits:
Gold Bar, Goldstone, Gold Ridge, Gold Pick, and Gold Canyon. From inception
through cessation of operations in 1994, 485,200 ounces of gold were recovered
from 7,514,600 tons of ore grading .074 ounces of gold per ton milled.
Mill construction was completed in 1986 with the first gold poured in
January 1987. The mill was originally designed and constructed for 1,500-tpd
throughput, later expanded in 1989 to the current 3,200-tpd rate.
Mining operations were suspended in February 1994 pending additional
drilling and further study of cost cutting measures. The confirmatory drill
program included 303 surface and 55 underground holes.
Between 1994 and 1997, the Companies decided to accelerate the exploration
of the claim block by entering into joint venture agreements with Rayrock
Yellowknife Resources Inc., Vista Gold Corp., Hemlo Gold Mines, Barrick Gold
Exploration, Inc., and Homestake Mining Company. All of these exploration
joint venture agreements have terminated.
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<PAGE>
Environmental Reclamation Claims
There are potential reclamation claims associated with the Gold Bar
property. The reclamation claims involve the costs to regrade, recontour,
fertilize and reseed the portions of the property disturbed by exploration and
mining operations. The requirement to reclaim Gold Bar arises from surface
disturbance on public land and later on private property. Bonds in the amount
of $265,000 have been posted for the obligations attributable to the exploration
land owned or leased by APMI. Bonds in the amount of $2,911,000 have been
posted for the obligations attributable to the cleanup of the public land and
fee land owned by AGMI including dismantling of the mill, reclamation of the
tailings pile, recontouring of dams and removal of roads.
Project Status
On June 6, 1997 Barrick Gold Exploration Inc. ("Barrick") completed the
purchase from AGMI and APMI of more than 90% of the Gold Bar property, with an
option to acquire the balance within two years. Atlas received $1,000,000 in
cash from Barrick, and Barrick purchased one million Atlas Common Shares at $1
per share. The funds were accounted for under the Companies inter-company
accounting procedures. Under the terms of the purchase, Barrick was required to
spend $3,000,000 on the property prior to June of 1999. At Barrick's election,
on or before June 3, 1999, the balance of the Gold Bar property was to be
conveyed to Barrick and the Companies could have elected either to receive an
additional $15,000,000 in cash and retain a 2% net smelter royalty, or to
participate with Barrick in the further exploration and development of Gold Bar
as a 25% carried joint venture participant. If the Companies elected to
participate as a joint venture partner, Barrick would spend a minimum of
$15,000,000 on the project. If Barrick chose not to acquire the balance of the
properties within the two-year period, all of Barrick's interest in the Gold Bar
properties would be reconveyed to APMI.
In December 1998, Atlas, AGMI and APMI negotiated a Mutual Termination
Agreement with Barrick, which returned the property to Atlas. Barrick also paid
to Atlas (for the benefit of APMI)/1/ $150,000 in satisfaction of its remaining
expenditure obligation (approximately $300,000). The funds were paid prior to
filing of the petitions by AGMI and APMI and were utilized to fund Atlas' post-
petition obligations. The funds were accounted for under the inter-company
accounting procedures and offset APMI's obligations to Atlas. Barrick had spent
$2.7 million of the required $3.0 million obligation on geologic mapping,
geophysics and exploratory drilling, and the results of the work suggested they
would not continue to perform under the agreement. The Mutual Termination
Agreement was approved by Court in January 1999.
During the course of the Bankruptcy proceedings, AGMI and APMI attempted to
market their interests in the Gold Bar property. Geographe was retained to seek
a purchaser for this
________________________
/1/ The $150,000 was properly allocated to APMI although the income statement
incorrectly reflected that it was allocated to AGMI. Under the $150,000 was
paid on account of the exploration properties conveyed by APMI to Barrick under
the terms of the Agreement. The assets owned by AGMI were specifically excluded
from the Barrick Agreement.
-16-
<PAGE>
property. Geographe prepared a Confidential Information Memorandum and contacted
parties who were deemed to be interested in the Gold Bar property. 27
prospective purchasers were contacted all of whom utlimately declined interest
in purchasing Gold Bar.
Since the Debtors were unable to locate a purchaser for Gold Bar, it was
decided that to preserve any value for the creditors that they should proceed to
dismantle the mill and sell it over a period of time, projected to be two years
and to seek value from the exploration properties in the form of a back-in,
reserved royalty or post confirmation participating interest in the property. To
preserve the unpatented mining claims, the Debtors were required to pay
maintenance fees to the Bureau of Land Management of $100 per claim plus a fee
to Eureka County, Nevada by August 31, 1999. The Debtors have obtained an Order
from the Bankruptcy Court authorizing them to reject any unpatented mining
claims for which they were unable to obtain an exploration agreement by August
31, 1999.
APMI, AGMI and Atlas reached an agreement with Vengold, Inc., which is
pending on notice before the Bankruptcy Court, for the acquisition and option
to acquire a portion of the Gold Bar property consisting of 603 unpatented
mining claims and 6 patented claims. Under the Agreement with Vengold, the
Atlas Parties shall grant Vengold the sole and exclusive right and option to
acquire a 100% interest in the Mining Properties defined under the Agreement
free and clear of liens, charges and encumbrances, subject to satisfaction of
three conditions: (1) reservation for the Atlas Parties of a two percent net
smelter royalty interest up to a maximum of $1,000,000, on all portions of the
properties which are not subject to a present royalty reserved or granted to
third parties and a net smelter royalty interest equal to the difference between
two percent and the actual royalty percentage granted to third parties under
present royalty agreements, (2) payment by Vengold of $60,300 to cover the
maintenance fees due to the Bureau of Land Mangagment and the County of Eureka
on the properties covered by the Agreement, which sum has been placed in escrow
pending approval of the agreement and (3) Vengold is obligated under the
Agreement to incur costs on or before December 31, 2000 in the aggregate amount
of $100,000 and by December 31, 2001 in the aggregate amount of $200,000. After
Vengold has fulfilled its obligations with respect to the $60,300 escrowed
funds, Vengold may terminate the Agreement without further obligation to incur
costs under the Agreement other than the maintenance fees to the Bureau of Land
Management and the County of Eureka due under the Agreement if the Agreement is
terminated after July 31 and before August 31 of any year.
The balance of the unpatented mining claims at Gold Bar have been rejected.
The Debtors will seek to dismantle and sell the Mill and will address the
reclamation liabilities through agreements with the bonding companies.
4. ARISUR INC.
In 1996, Atlas acquired a 50% interest in Arisur from Arimetco
International Inc., a Canadian corporation, for $3 million in cash and purchased
100% of Suramco from the Shipes Parties , which owned the remaining 50% interest
in Arisur, for four million shares of the Company's common stock. Arisur owns
and operates the Andacaba Mine and Mill as well as the Don Francisco and
Koyamayu development properties. All three properties are underground lead,
zinc and silver
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<PAGE>
operations located in southern Bolivia. Arisur processes ore through its
Andacaba Mill and in 1997 purchased the Koyamayu property and the Comali Mill
for expansion opportunities. The acquisition of the stock of Suramco, Arisur and
Cia Minera Andacaba resulted in disputes between Atlas, the Goldschmidts, the
former owners of the Andacaba Mine and the Shipes Parties. These claims and the
settlement thereof are discussed in the description of Litigation in this
Disclosure Statement. During 1997 Suramco's interest in Arisur was transferred
to Atlas, resulting in 100% direct ownership by Atlas. In 1998, the operating
company in Bolivia, Compania Minera Andacaba S.A., was merged into Arisur Inc.,
the Bolivian Branch, 100% controlled by Arisur.
Employees and Offices
Arisur's corporate office is located in La Paz, Bolivia and staffed by five
persons. Operations are directed out of Arisur's office in Potosi, which is
staffed by seven persons. Additionally, there are approximately 228 miners,
mill workers and maintenance persons directly involved in operations.
Andacaba Mine
- -------------
Location
The property is located in the south central altiplano region of Bolivia
near the city of Potosi, a historic mining community, at an elevation of
approximately 4,500 meters (14,800 feet). The Andacaba property is accessible
by traveling south/southeast 37 kilometers (23 miles) by road from Potosi.
Property
The Andacaba facilities and mine are situated on 18 concessions (land
tracts granted by the Bolivian government) controlled 100% by Arisur comprising
4,500 hectares (11,120 acres).
Operations
The Andacaba lead ("Pb"), zinc ("Zn") and silver ("Ag") mine has been in
operation since the early 1900s. The mining operations take place year round
with an average of 28 days per month for a total of 330 workdays per year.
During 1998, the Andacaba mine produced approximately 7,400 tonnes per month
with average head grades of 2.19% Pb, 6.32% Zn and 6.96 Troy ounces Ag per ton.
The Andacaba Mill processes ore from all three of Arisur's mining properties and
presently has excess capacity to perform custom milling. Lead and zinc
concentrates are shipped by truck to Potosi, and then by rail to open-air
storage at Portezuelo Station, near the Chilean seaport of Antofagasta, prior to
shipment to smelters in various markets.
Mining Methods
The mining method is shrinkage stoping with the mined out area being filled
with waste rock or left open. Due to the narrow width of the veins, stopes are
worked in panels 40 meters high and
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<PAGE>
30 meters long. Lateral development follows the vein and box holes are driven up
the vein. Access to a stope panel is by entrance at each end and no opening is
made to the upper level. All breaking is by up-holes. Cut off grades at the
Andacaba Mine are 1.76% Pb, 5.40% Zn and 4.82 ounces Ag per tonne at prices of
$480 per tonne Pb, $950 per Tonne Zn and $4.85 per ounce Ag.
Mill Concentration
Two concentrates are produced at the Andacaba Mill, one lead-silver, and
one zinc-silver. After the ore is first crushed by a jaw crusher to minus 3/4-
inch, grinding through four ball mills further reduces the size to 80% minus 100
mesh. After conditioning, the slurry reports to the lead recovery circuit, and
then the zinc circuit. Zinc and lead concentrates are separately thickened
prior to transport.
Condition
Service facilities at the mine site are basic and require upgrading as part
of the mine expansion for which financing efforts are underway. The Andacaba
Mill capacity was expanded in 1997 to 550 tonnes per day. A direct power line
from the Velarde II substation near Potosi was completed in August 1997. Water
for the mill is supplied from underground sources at the mine. The city of
Potosi provides a source of supplies and labor.
Geology/Mineralogy
The mineralized veins at Andacaba are enclosed in Tertiary porphyritic
quartz latite or rhyodacite volcanic rocks. The volcanics are part of an
igneous complex that includes an elliptical-shaped biotite granodiorite pluton
that outcrops south of the mine area. The pluton is believed to be 40
kilometers long and 14 kilometers wide. Volcanic breccias can be observed in
the mine area. Paleozoic sediments outcrop west of the mine and lead, zinc and
silver veins are known to occur in the sediments beyond the property boundary.
The thickness of the volcanic package is not known and at deeper levels in the
mine the host volcanics may be underlain by Paleozoic sediments or possibly
granodiorite. On the surface the veins are oxidized to a depth of about 20
meters. Minerals in the oxidized zone include limonite, hematite, goethite,
quartz and clay. In the sulfide zone the primary minerals are marmatite,
galena, jamesonite, boulangerite, sphalerite, tetrahedrite, stephanite, quartz,
pyrite, pyrrhotite, chalcopyrite, arsenopyrite, siderite, and others. Wall
rocks show very little alteration. There is possibly some silicification of the
rhyodacite.
Reserves/Resources
Reserves, as determined by Mineria Tecnica Consultores Asociados ("MINTEC")
in October 1996 stood at 547,000 tonnes proven and probable containing 2.68% Pb,
8.26% Zn and 9.13 Troy ounces Ag per tonne (284 grams). Reserves determined by
Arisur as of February 1997 stood at 561,000 tonnes proven and probable
containing 2.68% Pb, 7.19% Zn, and 6.01 Troy ounces Ag per tonne (187 grams).
Jose E. Del Solar M., an independent consulting engineer, in August 1998,
determined that reserves stood at 544,000 tonnes proven and probable containing
2.44% Pb, 8.78% Zn, and 9.7 Troy ounces Ag. Arisur has historically been able
to replace mined reserves through
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<PAGE>
continued development of the ore body. Current reserves will provide production
for approximately 4 to 5 years at current rates. The average grade of lead and
zinc reported in the mill head grades for 1998 of 2.19% Pb and 6.32% Zn are
below reserve grades. The difference between reserve grades and those reported
at the mill is caused by dilution from increased development and a reduced
percentage of production from the larger, higher grade veins. The Company is
seeking financing for the construction of a decline ramp, which will provide
more efficient access to the orebody. This is expected to return the balance of
mill feed to 50% from the principal veins, improving the head grades, and
significantly reducing unit costs.
Don Francisco Project
- ---------------------
Location
The property is accessible by road 77 kilometers (48 miles) in a southerly
direction from Potosi or 64 kilometers (40 miles) from the Andacaba mine. The
Don Francisco project is at an elevation of 3,000 meters (9,800 feet).
Property
Arisur owns 100% of five concessions (land tracts granted by the Bolivian
government) covering 227 hectares (approximately 560 acres).
Operations
The Don Francisco project produced approximately 350 tonnes per month in
1998. Head grades averaged 1.01% Pb, 10.18% Zn and 2.71 Troy ounces Ag per
tonne. Ore is trucked to Andacaba for processing. Limited exploration and
development continues at Don Francisco to provide for 5,000 tonnes to be milled
during 1999, as a supplement to ore feed. There has been no recent audit of
reserves or estimate of resources by an independent third party.
Conditions
Sufficient water is available to conduct the mining operations. Electrical
power is presently supplied by generator but a recently completed power line
supplies electrical power to within 2 kilometers of the project. Facilities are
situated on the property for the mineworkers and a radio communication system is
in place between Don Francisco and Andacaba.
Geology
The structural setting is similar to Andacaba in that there is one main
structure - the Veta Principal located south of the river, which flows across
the property and the Veta Cumbre north of the river with secondary splits off
the footwall of the main vein. Host rocks are Ordovician calcareous shales,
siltstones and sandstones which have been folded into a series of synclines and
anticlines. The Veta Principal occupies both flanks and the axial portion (for
a short distance) of a major anticline.
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<PAGE>
Koyamayu Project
- ----------------
In August 1997, Arisur completed the acquisition of the Koyamayu lead,
zinc and silver property, located in southern Bolivia, for $100,000. Arisur
mined and processed approximately 2,000 tonnes of ore during 1997, and 1,500
tonnes during 1998 with average head grades of 3.01% Pb, 11.18% Zn, and 4.35
Troy ounces Ag per tonne. 4,500 tonnes of ore are planned to be mined in 1999
from Koyamayu to be processed at the Andacaba Mill.
Comali Mill
- -----------
Arisur executed agreements to acquire the Comali Mill in late 1996 for
$250,000 and the acquisition was completed in January 1998. The facility
requires additional capital expenditures of an estimated $150,000 to achieve
operations of 120 tonnes per day. Its flotation circuits are designed to
recover lead, zinc and silver in separate lead and zinc concentrates. Arisur
intends to make use of Comali as a regional mill for Koyamayu ore and for toll
milling ore from third parties. The Comali Mill is situated near the community
of Toropalca, 30 kilometers south of Don Francisco.
5. CORNERSTONE INDUSTRIAL MINERALS CORPORATION
Project Status
In February 1999, Atlas completed the sale of its 61% interest in
Cornerstone to Seven Peaks Mining, Inc. In accordance with a Deposit Agreement
executed on October 2, 1998, as submitted to the bankruptcy court and approved,
Atlas sold its interest in Cornerstone (including debt owed to the Company) to
Seven Peaks. Atlas received approximately $2.9 million from this sale .
6. DISCONTINUED OPERATIONS - URANIUM MILLSITE, MOAB, UTAH
History
The Moab Uranium Millsite is located in Grand County, Utah, 2.5 miles
northwest of Moab, is accessed from U.S. Highway 191, and occupies approximately
200 acres within 437 acres owned by Atlas.
The Uranium Reduction Company ("URC") built and began operations at the
Millsite in October 1956. Atlas acquired URC in 1962 and operated the uranium
mill until 1984 when it was placed on stand-by status. Atlas closed the
operation in 1987. Atlas submitted its modified reclamation plan in August
1988. Atlas holds Source Material License SUA-917 for the Millsite, which was
changed to a "possession only" status on December 18, 1992. The NRC's most
recent inspection report, in February 1998, concluded that there were no
violations or deviations of the license.
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<PAGE>
Atlas was authorized to extract uranium oxide by both the acid and alkaline
leach processes and the mill was licensed for production at 850 metric tons
(1,870,000 pounds) of yellowcake annually. The majority of the ore processed at
the mill came from the Big Indian Uranium District approximately 30 miles to the
southeast. The sand-like material and mill solutions remaining after the
uranium was extracted (tailings) were pumped to the 130 acre tailings
impoundment adjacent to the Moab Uranium Millsite. The approximate wet weight
of the tailings was 10.5 million tons, with a volume of 7.5 million cubic yards.
An interim cover comprised of low-grade ore, native soils and a synthetic geo-
grid, was placed over the tailings beginning in 1989 and ending in 1995.
A decommissioning plan for the Moab Uranium Millsite was approved by NRC on
November 28, 1988. The dismantling and disposal of the mill buildings was
completed in 1996. All that remains at the Moab Uranium Millsite is an
office/warehouse and the 130 acre tailings impoundment.
On March 7, 1997 the NRC issued its Technical Evaluation Report ("TER")
which stated that the Atlas' Plan for closure was in compliance with the
technical requirements for capping the tailings onsite.
During the course of the Chapter 11, the NRC and the State of Utah filed
claims asserting administrative priority claims for reclamation against Atlas
exceeding $120 million. Atlas has finalized the MUMTA, the terms of which are
incorporated in the Atlas Plan, which absolves it from all future liability with
respect to the Moab Utah Site. The MUMTA was reached among the NRC, the State
of Utah, ACSTAR (surety provider for Atlas) and Atlas' Unsecured Creditor's
Committee after negotiations to avoid lengthy and expensive litigation over the
future of the Moab Utah Site. As consideration for this release, Atlas has
agreed to contribute certain Moab Utah Site assets to the Reclamation Trust to
be formed by NRC in consultation with Utah. The terms of the Settlement are
discussed in detail under the treatment of the claims of NRC and the State of
Utah, the Class 4 Claimants under the Atlas Plan. The MUMTA was approved by the
Bankruptcy Court after notice. Coincidental to this agreement, on March 15,
1999, the Company received from the NRC the final Environmental Impact
Statement, which concludes that the Company's proposed reclamation plan is
"environmentally acceptable," with certain recommended mitigation measures. On
May 28, 1999 NRC issued to Atlas its approval of the revised reclamation plan,
that the Reclamation Trustee shall assume.
B. FACILITIES - OFFICES - OPERATIONS
Atlas maintains its principal headquarters in Denver, Colorado at Republic
Plaza, 370 Seventeenth Street, Suite 3140, Denver, Colorado, 80202. AGMI and
APMI also maintain their principal place of business in Suite 3140 of the
Republic Plaza in Denver, Colorado and maintain as small office in Reno Nevada
for the Gold Bar property. The Debtors plan to move in September 1999 from
Suite 3140 in the Republic Plaza to a smaller space in the building under a
sublease. APMI also leases a small office in Vale Oregon which is utilized for
storage in connection with the Grassy Mountain Project. Arisur's corporate
office is located in La Paz, Bolivia. Operations are directed out of Arisur's
office in Potosi.
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<PAGE>
C. EMPLOYEES
Atlas employs 4 people at its headquarters in Denver, Colorado and 3 in
field offices (one at APMI's offices in Reno, one for AGMI in Eureka Nevada at
Gold Bar and one for Atlas at Moab, Utah).
D. EMPLOYEE BENEFITS - PENSION PLAN & RETIREE'S MEDICAL BENEFIT PLAN-
SEVERANCE AND VACATION POLICIES
Defined Benefit Plan
--------------------
Atlas has a trusteed and insured retirement plan (the " Defined Benefit
Plan") covering substantially all salaried employees. APMI and AGMI are
participating employers under the Defined Benefit Plan. The Defined Benefit
Plan provides pension benefits that are based on final average compensation
minus certain adjustments for primary social security benefits. Atlas' funding
policy for the Defined Benefit Plan is to make at least the minimum annual
contributions required by applicable government regulations. The Defined
Benefit Plan assets are invested primarily in equity securities, corporate and
government bonds and money market funds.
<TABLE>
<CAPTION>
Year Ended December 31,
- -------------------------------------------------------------------------------------------------------------
(In thousands) 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Components of net periodic benefit cost
- -------------------------------------------------------------------------------------------------------------
Service costs-benefits earned during the year $ - $ 9 $ 71
- -------------------------------------------------------------------------------------------------------------
Interest cost on projected benefit obligation 407 433 451
- -------------------------------------------------------------------------------------------------------------
Actual return on Plan assets (763) (1,043) (700)
- -------------------------------------------------------------------------------------------------------------
Net amortization and deferral 323 644 318
- -------------------------------------------------------------------------------------------------------------
Net periodic benefit cost for the year $ (33) $ 43 $ 140
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth the funded status of the Defined Benefit Plan and
amounts recognized in Atlas' financial statements at December 31 (in thousands):
<TABLE>
<CAPTION>
1998 1997
---------------- ------------------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Change in benefit obligation
- ----------------------------------------------------------------------------------------------------------
Benefit obligation at beginning of year $5,917 $ 6,506
- ----------------------------------------------------------------------------------------------------------
Service cost - 9
- ----------------------------------------------------------------------------------------------------------
Interest cost 407 433
- ----------------------------------------------------------------------------------------------------------
Actuarial loss 233 146
- ----------------------------------------------------------------------------------------------------------
Benefits paid (869) (1,047)
- ----------------------------------------------------------------------------------------------------------
Effect of curtailment - (130)
- ----------------------------------------------------------------------------------------------------------
Benefit obligation at end of year 5,688 5,917
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Change in plan assets
- ----------------------------------------------------------------------------------------------------------
Fair value of plan assets at beginning of year 5,190 5,122
- ----------------------------------------------------------------------------------------------------------
Actual return on plan assets 763 1,043
- ----------------------------------------------------------------------------------------------------------
Employer contributions - 72
- ----------------------------------------------------------------------------------------------------------
Benefits paid (869) (1,047)
- ----------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year 5,084 5,190
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Funded status (604) (727)
- ----------------------------------------------------------------------------------------------------------
Unrecognized net actuarial loss 267 341
- ----------------------------------------------------------------------------------------------------------
Unrecognized prior service cost (11) (35)
- ----------------------------------------------------------------------------------------------------------
Accrued benefit cost $ (348) $ (421)
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Assumed discount rate 7.25% 7.25%
- ----------------------------------------------------------------------------------------------------------
Expected return on plan assets 8.50% 8.50%
- ----------------------------------------------------------------------------------------------------------
Assumed rate of increase in future compensation N/A 5.0%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Effective March 1, 1997 Atlas froze future benefit accruals under the
Defined Benefit Plan. Past benefits earned will not be affected by this freeze.
On or about June 9, 1999, Atlas filed a PBGC Form 600, Notice of Intent to
Terminate, Distress Termination, with the Pension Benefit Guaranty Corporation
("PBGC") to terminate the Defined Benefit Plan. The proposed termination date
for the Defined Benefit Plan was August 15, 1999. The PBGC objected to the
notice on the grounds that it did not include Suramco and Arisur. Atlas filed a
second Form 600 on August 25, 1999 and Notice of the Intent to Terminate was
served upon the participants of the Defined Benefit Plan in compliance with the
procedures of the PBGC. The proposed termination date under the new notice is
October 27, 1999.
Atlas also filed a motion with the Bankruptcy Court for court approval to
terminate the Defined Benefit Plan, which is pending. The PBGC filed an
objection to the motion. The Defined Benefit Plan has retained counsel to
assist in evaluating the termination and the procedures for accomplishing the
termination. Preliminary valuations from actuaries retained by the Plan
indicate that the assets of the Defined Benefit Plan will be sufficient to pay
benefits up to the level guaranteed by the Pension Benefit Guaranty Corporation
("PBGC"), however, certain individuals with benefits in excess of the limits of
the PGBC will not receive their full benefit. The Defined Benefit Plan has
asserted an unsecured claim against Atlas in the approximate amount of $631,804
for funding deficiencies prior to 1997, the year benefit accruals were ceased.
The PBGC has disputed the valuations by the Plan's actuaries and certain
reductions in benefit payments. The PBGC has asserted that the Plan is
underfunded by approximately $2,004,900 as of an assumed termination date of
September 22, 1998. The PBGC has also filed claims against Atlas, AGMI and APMI
for unpaid minimum funding deficiencies of $527,614. In addition, the PBGC has
asserted claims against Atlas, AGMI and APMI in an unliquidated amount for
unpaid pension termination insurance premiums and related charges which the PBGC
asserts is entitled to priority under Section 507(a)(1) of the Bankruptcy Code.
Finally, the PBGC has asserted a claim for penalties against Atlas in the amount
of $282,800 for failure to provide timely notice of the Chapter 11 filing under
ERISA which the PBGC asserts is entitled to priority. Under prevailing case law
Atlas believes any claim of the Defined Benefit Plan or the PBGC is an unsecured
claim, including the penalty claims and insurance premiums which should be
treated as a Class 10 claim under the Atlas Plan. The PBGC has asserted that
the unfunded benefit liabilities are pre-petition taxes entitled to priority
under section 507(a)(8) of the Bankruptcy Code up to 30% of the collective net
worth of Atlas and its subsidiaries. The Atlas Parties dispute the PBGC's
position and maintain
-24-
<PAGE>
that under prevailing law that the claims are to be treated as unsecured claims.
The claims asserted by the PBGC shall be treated as contested claims under the
Atlas, AGMI and APMI Plans.
Atlas also has an Investment and Savings Plan to assist eligible employees
in providing for retirement or other future financial needs. Employee
contributions (up to 10% of their earnings) are matched in Atlas stock at a rate
of 100% up to a maximum of 6% of the employee's earnings. In addition, a 4%
contribution is provided for all eligible employees compensated on an hourly
scale. Atlas' contributions to this Plan in the years ended December 31, 1998,
1997 and 1996 were $26,000, $35,000 and $69,000, respectively.
Retiree Medical Plan
--------------------
In addition to the Defined Benefit Plan, Atlas has a defined benefit post
retirement plan (the "Retiree Medical Plan") covering most salaried employees.
The Retiree Medical Plan originally provided medical and life insurance benefits
to retirees of Atlas that meet certain qualifying criteria. The Retiree Medical
Plan is contributory, with retiree contributions adjusted annually, and contains
other cost-sharing features such as deductibles and coinsurance. The accounting
for the health care plans anticipates future cost-sharing changes to the written
plan that are consistent with Atlas' expressed intent to increase the retiree
contribution rate annually for the expected general inflation rate for that
year. Atlas' policy is to fund the cost of the post retirement health care
benefits in amounts determined at the discretion of management. Effective
December 15, 1997 Atlas terminated the life insurance plan for all participants
and also terminated the medical plan for all current employees, except for three
current employees (Dale Edwards, Don Canepa, Rich Blubaugh) who were
grandfathered. Retirees currently receiving medical benefits will continue
under the Retiree Medical Plan which is not impaired under the Atlas Plan.
Long Term Incentive Plan
------------------------
The Company's Long Term Incentive Plan (the "LTIP") provides that key
employees may be granted options to purchase common stock at the fair value of
the shares on the date of grant. At a February 17, 1995 Meeting of
Stockholders, the shareholders approved an amendment to the LTIP (i) to increase
by 850,000 to 1,745,000 the number of shares authorized for issuance under the
LTIP, (ii) to provide for the automatic grant to non-employee directors of the
Company of awards of stock options under the LTIP and (iii) to reduce the
minimum period prior to which an option may be exercised for all options granted
after January 6, 1995 from one year to six months. Options are exercisable for
a maximum of ten years from the date of grant and no options may be granted
after July 31, 1999.
During 1997 Atlas authorized the grant of options to key personnel for
85,000 shares of the Company's stock, of which 35,000 expired in 1997. The
remaining options granted have a 10 year term expiring August 15, 2007 and vest
and become fully exercisable at the end of six months of continued service.
During 1996 the Company authorized the grant of options to key personnel for up
to 971,000 shares of the Company's common stock. Of these, 200,000 were granted
with a two year term, expiring June 21, 1998 and fully vested and
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<PAGE>
exercisable at time of grant. Also, there were 100,000 options granted with a
two year term that expired November 5, 1998 and fully vested and exercisable at
time of grant. All remaining options granted have 10 year terms expiring
November 1, 2006 and vest and become fully exercisable at the end of six months
of continued service. No options were granted in 1998, nor in 1999, nor will
there be prior to confirmation. Under the Atlas Plan, the option rights
previously granted under the LTIP will be voided. Atlas further plans to
terminate the LTIP.
Prepetition Vacation, Severance and Health Insurance Benefits.
--------------------------------------------------------------
Atlas has established policies for vacation and severance for employees and
provides health and life insurance benefits.
Vacation
--------
The following table shows the rate of vacation accrual based on term of
employment with Atlas.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Continuous Employment Annual Rate of Accrual Claim Maximum
Vacation
Benefit
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Completion of up to 3 years 80 hours 6.67 hrs/ month 20 hours
- -------------------------------------------------------------------------------------------------
Completion of 3 years ---9 years 120 hours 10 hrs/month 30 hours
- -------------------------------------------------------------------------------------------------
Completion of 10 years --- 19 years 160 hours 13.34 hrs/month 40 hours
- -------------------------------------------------------------------------------------------------
Completion of 20 years or more 200 hours 16.67 hrs/month 50 hours
- -------------------------------------------------------------------------------------------------
</TABLE>
According to policy, no employee is eligible to have more than 1- 1/2 times
his/her annual vacation benefit accrued at one time, except for Dale Edwards and
Don Canepa due to "transition hours" earned in 1993 prior to implementation of
the vacation policy dated January 1, 1994.
Severance
---------
Severance benefits provided by Atlas are generally of two categories; the
first is by employment contract or written commitment with key personnel. These
vary from individual to individual and are not available to all employees. The
second category is Atlas' established practice of providing severance pay for
employees who are involuntarily severed from the Company due to no fault of
their own. This practice provides for two weeks pay for each full year of
employment, at the rate being paid at the time the employ is severed. According
to previously established policy and/or practice, severance pay is not available
to employees who "quit" or terminate their employment with Atlas of their own
volition, or for cause.
Post-Petition Benefits
----------------------
Employment benefits provided by Atlas after September 22,1998 are as
follows:
Vacation: The prepetition vacation policy has been terminated with accrued
---------
but unpaid vacation asserted as a Class 2 claim under the Atlas Plan. The post
petition policy provides that
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<PAGE>
current employees have five days vacation available for their use immediately.
Also, effective October 1, 1998, future vacation benefits will be earned, as
before.
Severance: All prior employment contracts, agreements or commitments are
-----------
"executory contracts" under the provisions of the Bankruptcy Code. Atlas plans
to reject all prepetition employment and severance contracts. As an interim
measure, all current employees have been credited with one-month severance at
current pay rates. This interim measure will be in effect until the Effective
Date of the Atlas Plan, at which time the Company may, subject to approval of
the Board of Directors, reinstate the severance policy. Existing employees are
eligible for this severance payment upon termination with the exception of being
severed for Cause according to Policy # 410.
Health Insurance:
-----------------
Atlas provides health and life insurance benefits for its employees.
Voluntary termination effectively results in the immediate termination of health
and life insurance benefits (unless the employee elects to continue health
coverage under COBRA within 60 days of termination and submits payment in an
amount covering the time from termination to date of the initial payment). In
order to assist the current employees with career changes or personal choices
that may be made as a result of the reorganization of Atlas, provided that
he/she is not terminated for Cause, Atlas will extend the current group medical
health insurance for up to six months beyond the termination date. Atlas has
requested that it be notified if replacement coverage is acquired by the
terminated employee before the six months has expired.
E. FINANCING
Generally, Atlas and its subsidiaries do not finance their operations with
customary lender financing. This is due in large part to the lack of available
affordable financing due to the many risks associated with mining operations.
The exception to this is Arisur whose operations are financed as discussed
below. Atlas' secured debts principally arise in connection with its
environmental liabilities. Its environmental cleanup obligations are secured by
bonds posted by ACSTAR and United States Fire Insurance Company which were
secured in part by letters of credit. AGMI and APMI also have secured
environmental cleanup obligations. These secured obligations are discussed in
detail under the sections of the Disclosure Statement discussing the Atlas, AGMI
and APMI Plans. In addition there were disputed claims with Gerald Davis, a
former director and President of the Companies as to whether he holds a security
interest against the Gold Bar property executed in settlement of an arbitration
proceeding arising from his severance agreement. The Davis claim has been
settled and is treated in Class 13 under the Atlas Plan and Class 43 under the
AGMI Plan.
In February 1997, Arisur signed a financing agreement with the Corporacion
Andina de Fomento ("CAF") for US $3.0 million of which $2.3 million was drawn
("CAF Loan"). CAF is a multilateral financial institution that supports
sustainable development and integration efforts within the Andean region of
South America. The proceeds of the CAF Loan, received in May 1997, paid for
certain equipment and expansion programs of the Bolivian operations and
reimbursed Atlas approximately $500,000 for funds previously advanced for said
purposes. The CAF Loan is
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<PAGE>
repayable in five equal semi-annual principal installments of $383,000 (May and
November) plus outstanding interest. The loan bears interest at the six month
LIBOR rate plus 4.5% (9.56% at December 31, 1998). Outstanding amounts are
collateralized by certain property, plant and equipment of Arisur with a
carrying value of approximately $9,500,000. Atlas has guaranteed the obligations
of Arisur to CAF. Further, Atlas has agreed to a subordination provision which
precludes Arisur from repaying advances to Atlas during any period in which
Arisur is in default of the CAF Loan. Arisur and Atlas are in default of certain
covenants under the CAF Loan, and have not made the principal payment due in May
1999. CAF has not commenced proceedings to exercise any of its rights under the
Loan Agreement. Arisur has made payments under the CAF loan of principal of
$383,000 and interest of $444,500, including the interest payment due May 1999.
The outstanding principal balance of the loan is $1,916,667.
Arisur has negotiated a modification to the loan to defer the payment
obligations with the possibility of obtaining additional capital for development
at the Andacaba Mine in the future. Negotiations have been ongoing since
September 1998 with CAF regarding refinancing of the loan and operations of
Arisur. On August 11, 1999, Atlas filed a Motion with the Bankruptcy Court to
approve the terms of a restructure of the CAF Loan. There are three conditions
to the restructure: (1) Arisur/Atlas must demonstrate to the satisfaction of CAF
that they have the necessary funds (approximately $350,000) to cover the costs
of drilling in order to increase the level of proven reserves. Once Arisur/Atlas
establish that they have the necessary funds, the debt will be restructured to
provide for payments at the default rate for the grace period of 18 months; (2)
The existence of proven reserves sufficient for the exploration of the deposits
in a financially profitable manner must be verified for a period of not less
than four years; and (3) The subordination agreement must be executed and the
mortgage guarantees by Arisur perfected. Once the second and third conditions
are met, CAF will restructure the Loan for a period of four years including the
grace period of 18 months. During the grace period, Arisur will pay semi-annual
interest only payments. The principal would be paid during the next 5 semi-
annual periods, the first of which would be due 24 months after execution of the
restructuring agreement. The final principal payment period and the grace period
will be reviewed and modified once the quantity of proven reserves has been
determined. If the drilling program establishes proven reserves sufficient to
increase the useful life of the mine to more than 5 years, CAF would be willing
to consider a loan for the development of the property. No objections to the
Motion to Restructure the CAF loans were filed and the Debtors anticipate that
an Order will enter approving the terms of the Restructure by or near the
hearing on the adequacy of the Disclosure Statement.
Atlas and Arisur have been negotiating with CAF and have reached a
tentative agreement to modify the condition that they expend funds for a
drilling program. Atlas and Arisur have proposed that the funds be spent to
expand to internal shafts at the mine improving access to the ore bodies and
extending the useful life of the mine. Atlas believes that this development
program will substantially reduce the capital required and that a majority of
the expansion can be funded through Arisur's operations.
-28-
<PAGE>
F. EXECUTORY CONTRACTS AND UNEXPIRED LEASES
The Court has extended the deadline to assume or reject the Debtors
nonresidential real property leases through the date of hearing on confirmation
of the Atlas Plan, the AGMI Plan and the APMI Plan. The Debtors will file
Motions pursuant to 11 U.S.C. (S)365 and notice under Fed. R. Bankr. P. 2002 and
6006 to assume any executory contracts or unexpired leases prior to the hearing.
The Plans provide that any executory contracts or leases which the Debtors do
not seek to assume will be deemed rejected. Attached hereto as Exhibits E, F
and G, are the Debtors' projections as to which agreements will be assumed and
rejected.
AGMI and APMI are parties to a number of agreements pertaining to their
mining leases, unpatented lode and millsite claims, and mining permits. The law
is unclear as to whether these mining agreements are nonresidential real
property leases governed by (S)365(d)(4), unexpired executory contracts or as
outright conveyances which are not executory contracts. To avoid any question,
APMI and AGMI have requested, which the Court granted, that the deadline to
assume or reject leases govern these agreements as well. To avoid any question,
the Debtors will treat these agreements as if the provisions of Section 365
apply. The Debtors are not in default post-petition of any obligations under
their unexpired leases or executory contracts.
Atlas Corporation
-----------------
Atlas is a party to an unexpired lease of nonresidential real property for
the lease of its office space in the Republic Plaza building described as 370
Seventeenth Street, Suite 3140, Denver, Colorado 80202 pursuant to a lease
commencing December 20, 1997 between Brookfield Republic, Inc., and Atlas. The
Lease expires on December 31, 2000. In addition, Atlas is the lessee of the
exploration office space in Reno Nevada pursuant to a lease commencing August
14, 1997 between DiFrancesco-Feron and Atlas. The Lease is currently on a month
to month basis. Atlas is current in its post-petition obligations owing under
the leases. Atlas plans to file a Motion to Reject the Brookfield lease by
September 15, 1999 and for authority to enter into a sublease agreement from
Vista Gold. Brookfield Republic has located a tenant willing to lease Suite
3140. Atlas will sublease significantly less space from Vista Gold. The
rejection of the Brookfield lease and approval of the sublease will reduce the
rent obligations by $5,671.53 per month. Atlas anticipates that it will file a
motion to assume the lease in Reno, Nevada.
Gold Bar AGMI and APMI
-----------------------
The Gold Bar property at one time comprised approximately 100 square miles
including 3,300 unpatented lode and millsite claims, and 160 acres of patented
land. APMI and AGMI owned the rights to approximately 3,200 lode claims which
are subject to timely paying the maintenance fees due annually on August 31 to
the Bureau of Land Management. There were an additional 446 lode claims which
APMI owns subject to obligations to pay royalties to the prior owners. There
were obligations which accrued in June of 1999 under the leases and in August of
1999 to preserve these properties. As set forth below, APMI has, with Bankruptcy
Court approval rejected all of its leases. Although the Debtors have attempted
to sell the Gold Bar property as an entirety, they were unable to locate a
purchaser prior to the August 31, 1999 deadline for payment of maintenance fees
-29-
<PAGE>
to the Bureau of Land Management. The Court has entered an Order authorizing the
Debtors to reject any of the unpatented claims for which they were unable to
obtain agreements in the form of a back-in, reserve royalty or participating
interest. The Debtors have reached an acquisition and option agreement with
Vengold, Inc., for the acquisition of 603 unpatented claims and 6 patented
claims at Gold Bar of which 501 unpatented claims are held by APMI, 68
unpatented and 6 patented claims are held by AGMI and 28 unpatented claims are
held by Atlas. The balance of the unpatented mining claims, with the exception
of 55 which APMI retained, as discussed herein, have been rejected and have
lapsed as the maintenance fees owing to the Bureau of Land Management have not
been paid.
APMI has rejected, with Bankruptcy Court approval the following leases:
Wildflower Lease No. 84018 with Milwhite Co., Inc., for 10 unpatented lode
claims; Ziff Lease No. 84022 with Front Range Minerals, Inc for 72 unpatented
lode claims; Benmark Lease No. 84035 with Julien E. Simpson for 34 unpatented
lode claims; Elizondo Lease No. 84014 with Jose Goyeneche for 7 unpatented lode
claims and Golden Clam Lease No. 84052 with Lana Resources for 56 unpatented
lode claims. . In addition, APMI has, with Court approval, terminated its lease
agreement with Eureka Livestock Company for 2,074.6 acres, 67% Minerals 100%
surface 1,640 acres and 37% Minerals 100% surface 434.6 acres. AGMI has also
terminated its surface use agreement with Eureka Livestock Company.
Grassy Mountain - APMI
----------------------
The Grassy Mountain property encompasses approximately 7 square miles.
APMI owns certain unpatented lode claims, additional unpatented lode and
placer claims are controlled under separate mineral lease or lease/option to
purchase agreements. Approximately 1,000 acres of fee surface, 240 acres of fee
surface and minerals, and 80 acres of fee minerals are held under two
lease/option agreements. APMI is not in default of any obligations under its
unexpired leases and executory contracts. The obligations which accrued in the
summer of 1999 to preserve the property rights have been satisfied. APMI is
evaluating the prospects for the sale of Grassy Mountain. APMI plans to assume
the leases. The lease/option agreements are more fully described as follows:
<TABLE>
<CAPTION>
Name Lessor Number of Effective Term Annual
- ------------- ---------------------- ------------------ ----------- --------- ------------------
Claim Date Payments
------------------ ----------- ------------------
Due
------------------
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bishop I John J. Bishop and 1-5 unpatented 9/11/89 20 yrs $ 500 (1998)
No. 92000I Henry F. Bishop claims and Fee $ 3,000 (1999)
d/b/a Bishop Lands located in
Brothers, John J. sections 11-15 T.
Bishop, Trustee, 22 S., R. 43
Eileen Bishop, Eileen E.,Malheur
M. Bishop, County, OR
Trustee,Henry F.
Bishop, Judy Bishop,
aka Judith Bishop
- -----------------------------------------------------------------------------------------------------
</TABLE>
-30-
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bishop II John J. Bishop and Mineral rights 9/11/89 20 yrs $ 500 (1998)
No. 92000J Henry F. Bishop [S.E. S.W. Sec. $15,000 (1999)
d/b/a Bishop 12 S.E., S.W.
Brothers, Ann Schlupe Sec. 13]
and Frank B. Bishop
- ----------------------------------------------------------------------------------------------------
Sherry & Sherry & Yates, Inc. Unpatented mining 3/5/86 20 yrs $20,000
Yates Lease claims known as
No. 92000F Poison Springs March 2000
1-38, 16A, 17A
- ----------------------------------------------------------------------------------------------------
</TABLE>
APMI has reached an agreement with the Bishops to reduce the annual payments due
under the leases to $500 annually and therefore plans to move to assume the
Bishop I and II and Sherry & Yates leases.
In addition, APMI leases office space in Vale Oregon. The lessors on the
property are George & Burtta Jean Glerup. The lease is on a month to month
basis. The Debtor plans to assume this lease.
G. ENVIRONMENTAL LIABILITIES
Atlas and its subsidiaries are subject to extensive federal, state and
local environmental laws and regulations. These laws, which are constantly
changing, regulate the discharge of materials into the environment and may
require Atlas, AGMI and/or APMI to mitigate any environmental effects caused by
its past and present operations. Atlas, AGMI and APMI believe that they are in
material compliance with all federal, state and local environmental regulations
applicable to their current and discontinued operations.
The Moab License, issued by the NRC requires Atlas to decommission and
reclaim the Moab Utah Site. The Company discontinued its uranium operations in
1987, and the estimated shutdown and reclamation expenses were accrued.
Reclamation and decommissioning costs (net of reimbursements, see below) of
$825,000, $1,215,000 and $1,808,000 have been charged against this accrual for
the years ended December 31, 1998, 1997 and 1996. The approval process for
Atlas' plan of reclamation was again extended during 1998. The delays in this
process have continued to increase the ultimate cost of the reclamation plan due
to additional technical information requirements, continuing overhead costs,
legal and consulting fees, as well as inflation and other ongoing compliance and
carrying costs of the property. Due to these added costs, along with possible
changes in the scope of Atlas' reclamation plan, Atlas reevaluated its uranium
reclamation accrual and concluded that an additional charge of $3,000,000 was
required in the year ended December 31, 1997. The balance of the accrual at
December 31, 1998 was $21,110,000. Title X of "The Comprehensive National
Energy Policy Act", which was enacted in October 1992, provides for
reimbursement by the federal government of past and future reclamation expenses
in proportion to the extent that the Moab Utah Site's tailings were generated by
Atomic Energy Commission
-31-
<PAGE>
("AEC") contracts. With respect to Atlas' discontinued uranium operations, 56%
of the tailings were generated by AEC contracts. Requests for reimbursement
under Title X must be submitted annually to the Department of Energy ("DOE") and
are subject to review and audit. At December 31, 1998, the Company had recorded
a Title X receivable of $14,784,000, which includes claims already made as well
as an estimate of future claims based upon the recorded reclamation liability.
The timing on the repayment of costs approved for reimbursement is a function of
Congressional appropriation.
In July 1994, Atlas submitted the first of six claims under Title X for
reimbursement of compliance and reclamation costs. The six claims cover costs
incurred from fiscal 1980 through March 1999. The total amount reimbursable
under the six claims is $7,378,000. As of May 1, 1999, Atlas had received
$5,908,000 in reimbursements under Title X, leaving a remaining balance due of
$1,470,000.
On March 12, 1999, the NRC issued the "Final Environmental Impact Statement
Related to Reclamation of the Uranium Mill Tailings at the Atlas Site, Moab,
Utah," ("FEIS"). The FEIS concludes that the Atlas proposed on-site
reclamation, with certain recommended mitigation, was acceptable. Atlas has
accepted certain license conditions, recommended changes to others, and
anticipates NRC to amend the License to permit the reclamation plan to proceed.
The MUMTA, reached among NRC, the State of Utah, ACSTAR (surety) and the
Unsecured Creditor's Committee, eliminates all future liability arising in
consideration for Atlas contributing certain Moab related assets and resources
to a trust to be established and directed by the government. The terms of the
MUMTA are disclosed in detail in the discussion of the treatment of the Class 4
and 5 claims under the Atlas Plan.
Atlas also has environmental cleanup liabilities arising from its asbestos
operations in Coalinga, California for the cleanup of the Atlas Operable Unit as
defined in the Consent Decree, which is part of the Atlas Asbestos Mine
Superfund Site. The claim is held by the Environmental Protection Agency's
("EPA"). Atlas, Vinnell Mining and Minerals, (now known as TRW, Inc.) and the
EPA agreed to a Consent Decree which was entered by the United States District
Court for the Eastern District of California, Fresno Division Civ-F-92-5373-OWW
on October 15, 1992. The Consent Decree required that Atlas and Vinnell conduct
the cleanup of the site which is part of the Atlas Asbestos Mine Superfund Site
in Fresno County, California and to reimburse the United States for all costs it
incurred in conjunction with the site. The EPA billed Atlas and Vinnell (who
are jointly and severally liable) $441,262.67 for the period from December 1,
1990 through December 31, 1993 and $236,161.50 for the period from January 1,
1994 through December 31, 1994. Atlas and Vinnell disputed these costs and
agreed with the EPA to place the disputed sum in escrow. The balance of the
escrow account as of March 5, 1999 was $764,092.46. In January, 1999, EPA
billed Atlas and TRW an additional $797,274.60 in costs associated with the
site, which TRW paid. The EPA has asserted that the balance of the escrow
account is approximately $1,480,350.71. TRW has indicated that the escrow
account holds in excess of $1,580,000. Atlas has been unable to verify these
amounts. The EPA has filed a claim asserting a secured claim for the funds in
the escrow account. TRW has reserved the right to object to EPA's claims.
Atlas believes that at some time
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<PAGE>
in the past it also reserved the right to raise the same objection. TRW has
filed a claim for $533,816 plus all future accruing costs for Atlas' share of
the remediation and oversite costs. In its claim the EPA has reserved its right
to increase its claim above the escrow account, but to date has not done so.
In 1993 and 1994, Atlas Corporation received notice from EPA that it was a
potentially responsible party under CERCLA at the Solvent Recovery Service Site
("SRS Site") in Connecticut and the Old Southington Landfill Site ("OSL Site")
in Southington, Connecticut, respectively. The Debtor had owned Titeflex, Inc.
in the 1950s and early 1960s. During this time and for some years after
Titeflex was sold, Titeflex disposed of certain solvents through an arrangement
with Solvent Recovery Service ("SRS"). SRS apparently did not adequately treat,
contain or dispose of the materials it received from its customers and
eventually shipped some of its waste sludges to the Southington Landfill. The
Debtor's allocated share of responsibility is very small - less than one percent
for each of the sites. The Debtor executed an allocation agreement with
Titeflex which called for Titeflex to indemnify the Debtor for the first $50,000
and share any liability thereafter with the Debtor incurring about 59 percent.
In return, the Debtor agreed to indemnify Titeflex for liability at the OSL
site. Total liability for the Debtor from these two CERCLA sites was estimated
by Atlas in 1996 to be less than $100,000. The estimates were prepared by
Richard Blubaugh, then the Vice President of Environmental and Governmental
Affairs with the assistance of counsel.
Estimated reclamation costs relating to the Gold Bar property are recorded
based on the units of production method. Bonds in the amount of $265,000 have
been posted for the obligations attributable to the exploration land owned or
leased by APMI. Bonds in the amount of $2,911,000 have been posted for the
obligations attributable to the cleanup of the mining operations conducted by
AGMI.
Estimated reclamation costs for the Grassy Mountain property have not been
determined. APMI has posted bonds in the amount of $146,000 to secure the
obligations. APMI believes that the actual costs will be substantially less
because certain roads and drillsites have been reclaimed and reseeded. The BLM
and DOGAMI have not yet inspected the sites and formally reduced the bond
amounts. APMI's belief is further substantiated by a preliminary reclamation
cost estimate obtained from a local reclamation contractor.
H. SHAREHOLDERS, MANAGEMENT & RELATED ENTITIES
1. SHAREHOLDERS
Atlas Corporation
-----------------
Atlas is a publically held company whose common stock is registered with
the Securities Exchange Commission ("SEC") to be traded on the NASDAQ Bulletin
Board ("NASDAQ") under the symbol ATSP. Atlas is current in its filing
requirements with the SEC. Atlas filed its Form 10-K for the Fiscal Year ended
December 31, 1998 on or about April 15, 1999, the 10Q for the period ended March
31, 1999 on April 17, 1999 and the 10QSB for the period ended June 30, 1999 on
August 13, 1999. Atlas reports to the SEC on a consolidated basis, including
consolidated audited financial statements and includes the operations of its
subsidiaries, including AGMI, APMI and Arisur.
-33-
<PAGE>
As of March 26, 1999, the date utilized in Atlas' 10-K filing with the
SEC, there were 27,514,544 shares of common stock outstanding held by non-
affiliates of Atlas. The common stock has a par value of $0.01 per share. The
aggregate market value of the common stock as of March 26, 1999 was $1,373,727.
The common stock is the only class of voting stock. The high and low sales
prices for the common stock for each quarterly period are as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended High Low High Low High Low
- -------------------------------------------------------------------------------------------------------------
March 31 $0.42 $0.15 $0.8125 $0.5625 $1.875 $1.375
- -------------------------------------------------------------------------------------------------------------
June 30 0.41 0.17 0.75 0.3438 1.50 1.0
- -------------------------------------------------------------------------------------------------------------
September 30 0.35 0.04 0.50 0.125 1.125 0.695
- -------------------------------------------------------------------------------------------------------------
December 31 0.09 0.03 0.375 0.625 1.125 0.625
- -------------------------------------------------------------------------------------------------------------
</TABLE>
No dividends were declared in the years ended December 31, 1998, 1997 and 1996.
At March 26, 1999, there were approximately 15,800 holders of record of the
Company's common stock. There are four shareholders who currently own five
percent or more of the Company's common stock. In addition, Messrs. Shafter,
Blubaugh and Jensen each own less than one percent of the outstanding stock of
Atlas. See Exhibit L attached hereto.
Atlas is authorized to issue 1,000,000 shares of preferred stock, par value
$1 per share. The preferred stock is issuable in series, with designations,
rights and preferences to be fixed by the Board of Directors. The Board of
Directors has established a series of 200,000 shares of Series Preferred Stock
designated Series A Junior Participating Preferred Stock ("Series A Preferred
Stock"), no shares of which have been issued.
At Atlas' annual meeting held on June 18, 1998, the stockholders of Atlas
approved an amendment to its Restated Certificate of Incorporation increasing
the number of authorized shares of common stock from 50,000,000 shares to
100,000,000 shares and reducing the par value of the Company's common stock from
$1.00 to $0.01 per share. The amendment was filed with the Delaware Secretary
of State and effective on August 13, 1998.
At December 31, 1998 there were 875,000 shares of common stock reserved for
the conversion of an outstanding Convertible Debenture and 2,032,111 shares of
common stock reserved for Option Warrants which are exercisable at a price of
$15.625 per share and have no expiration date ("Perpetual Warrants"). Since
December 31, 1995, no Perpetual Warrants have been issued or exercised. Also at
December 31, 1998 there were 4,545,455 shares of common stock reserved for
Option Warrants issued in connection with private placements.
APMI
----
APMI is a wholly owned subsidiary of Atlas. There are 1,000 shares of
common stock outstanding which are issued to Atlas. APMI is not a publically
traded company. APMI is included in the audited consolidated financial
statements which are utilized in the SEC filings for Atlas. Further, the Atlas
10-K form discusses the activities of APMI at Grassy Mountain and Gold Bar.
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<PAGE>
AGMI
----
AGMI is a wholly owned subsidiary of APMI. There are 1,000 shares of
common stock outstanding which are issued to APMI. AGMI is not a publically
traded company. AGMI is also included in the audited consolidated financial
statements which are utilized in the SEC filings for Atlas. Further, the Atlas
10-K form discusses the activities of AGMI at Gold Bar.
2. DIRECTORS
Atlas Directors
---------------
The directors of Atlas are divided into three classes and hold office for a
term of three years ending with the annual meeting of stockholders held in the
year ended December 31, 1999 in the case of Class II, in the year ended December
31, 2000 in the case of Class III and in the year ended December 31, 2001 in the
case of Class I. There are currently six directors. There is no Chairman of
the Board. The Board Members appoint an acting chair at the commencement of
each meeting. The following table sets forth certain information concerning each
director:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Principal Occupation, Past Five Year's
Director Business Experience and Other
Name Since Directorships Held Age
- --------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS II
(Term of office expires at the Annual Meeting of Stockholders held in the year
ended December 31, 1999)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
James H. Dunnett 1995 An independent business consultant specializing 49
in finance for the mining industry
internationally and prior to that he was a
principal of Endeavor Financial Corp. Mr.
Dunnett's business address is 1860 Robson
Street, Suite 1401, Vancouver, BC, V6G 3C2,
Canada.
- --------------------------------------------------------------------------------------------------
C. Thomas Ogryzlo 1993 Currently President and CEO of Black Hawk 59
Mining Inc. and formerly Triton Mining
Corporation prior to merger of the two
companies in May 1998. Prior to August 1997
Chairman of Kilborn SNC-Lavalin, a world class
engineering firm; Director of Carib Gold
Resources Inc.; Franco, Nevada; Tiomin
Resources and Vista Gold Corp. Mr. Ogryzlo's
business address is 95 Wellington Street West,
Suite 1800, Toronto, Ontario, M5J 2N7.
- --------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
CLASS III
(Term of Office expires at the Annual Meeting of Stockholders
held in the year ended December 31, 2000)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Douglas R. Cook 1988 President of Cook Ventures, Inc., a geological 73
consulting firm. Mr. Cook's business address
is 2485 Greensboro Drive, Reno, Nevada 89509.
Gregg B. Shafter 1998 President of the Company since October 1997. 43
Prior to that Mr. Shafter served in various
capacities with Atlas, including Vice President
of Project Development and Land Manager.
Shafter's business address is 370 Seventeenth
Street, Suite 3140, Denver, CO 80202.
</TABLE>
CLASS I
(Term of Office expires at the Annual Meeting of Stockholders held in the
year ended December 31, 2001)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Mario Caron 1996 Presently an independent management consultant. 45
Formerly President, Chief Executive Officer and
director of Eden Roc Mineral Corp. from
February 1997 to March 31, 1999. Chief
Executive Officer of Atlas from September 1996
to January 1997. From 1993 to 1996, President
and Chief Executive Officer of MSV Resources
Inc. and from 1987 to 1993 President of
Corpomin Management Inc. Mr. Caron also is
director of three junior Canadian exploration
companies. His current business address is 1
First Canadian Place, Suite 2610, Toronto,
Ontario M5X 1E3, Canada.
Richard E. Blubaugh 1998 Executive Vice President of Atlas since 1998 51
and prior to that served as Vice President of
Environmental and Governmental Affairs. Mr.
Blubaugh's business address is 370 Seventeenth
Street, Suite 3140, Denver, CO 80202.
</TABLE>
Atlas is seeking to transition management and the Board through the meeting
of shareholders to be conducted after the Effective Date. Mr. Shafter and Mr.
Blubaugh will continue to serve as directors. Atlas is seeking to appoint two
new Board members, prior to the Effective Date, who have the approval of the
Creditors Committee. This will require the resignation of two Directors if and
when two candidates are identified and accept the appointment.
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<PAGE>
Compensation of Directors
-------------------------
Fees paid to non-employee directors consist of a $1,000 fee for each Board
of Directors meeting attended in person, a $500 fee for each Board of Directors
meeting attended by telephone and a $500 fee for each committee meeting
attended.
At one time, upon joining the Board, all non-employee directors were
awarded a one time grant of 50,000 options under the Long Term Incentive Plan
("LTIP"), vesting six months from the grant date, at an exercise price equal to
the market price on the grant date or $1.00 per share, whichever is higher. In
addition, the Chairman was awarded options to purchase 25,000 shares of Atlas
common stock, as granted under the LTIP, vesting six months from the grant date
at an exercise price equal to the closing market price on the grant date or
$1.00 per share, whichever was higher. These compensation programs have been
terminated.
AGMI
----
There are two directors of AGMI who serve perpetual terms until their
removal or resignation. The directors of AGMI are Gregg B. Shafter who is
discussed above under Atlas and James R. Jensen who is also the CFO, Secretary
and Treasurer of Atlas and who is discussed below under Officers of Atlas.
APMI
----
There are two directors of APMI who serve perpetual terms until their
removal or resignation. The directors of APMI are Gregg B. Shafter who is
discussed above under Atlas and James R. Jensen who is also the CFO, Secretary
and Treasurer of Atlas and who is discussed below under Officers of Atlas.
3. MANAGEMENT
Atlas
-----
Executive Officers
Set forth below is the age and certain other information regarding each
person currently serving as an executive officer of the Company.
Gregg B. Shafter, age 43, has served as President since October 7, 1997.
Since joining Atlas in August 1991, Mr. Shafter has also served in the
capacities of Vice President of Project Development, Manager Business
Development and Land Manager. Prior thereto Mr. Shafter performed acquisition
and administrative functions for Western Gold Exploration and Mining Company,
Limited Partnership and Atlantic Richfield Company.
Richard E. Blubaugh, age 51, currently serves as Executive Vice President
since September 1998 and has served as Vice President of Environmental and
Governmental Affairs since October 1,
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<PAGE>
1990, and has been with Atlas for 17 years. He has been involved in the
environmental, health and safety field for over 23 years, has managed
environmental and regulatory functions for mining firms in seven western states,
and also has experience as a regulator and a consultant.
James R. Jensen, age 39, currently serves as Chief Financial Officer since
September 1998 and has served as Treasurer and Secretary since February 1997.
Mr. Jensen joined Atlas in August of 1989, as Accounting Manager and was
promoted to Controller in September 1993. Prior to his employment with Atlas,
Mr. Jensen was a manager with the accounting firm of KPMG Peat Marwick.
Committees of the Board of Directors
------------------------------------
Atlas has an Audit Committee and a Compensation Committee of which the
Board of Directors appoints all members. The Compensation Committee consists of
Messrs. Ogryzlo and Cook. The Audit Committee consists of Messrs. Dunnett,
Caron and Ogryzlo. The principal functions of the Audit Committee are to
recommend the selection of the Company's auditors, review with the auditors the
scope and anticipated cost of their audit and receive and consider a report from
the auditors concerning their conduct of the audit. The principal functions of
the Compensation Committee are to administer the Company's 1979 Key Employee
Stock Incentive Plan, Long Term Incentive Plan, Annual Incentive Plan and
Retirement Plan for Outside Directors, to recommend changes in compensation
plans and the adoption of new compensation plans and to recommend compensation
for senior officers of Atlas. During the year ended December 31, 1998 the Audit
Committee held three meetings and the Compensation Committee did not meet in
1998.
Management Through the Post-Confirmation Shareholder's Meeting
--------------------------------------------------------------
The management plan for Atlas through the Shareholders Meeting to be
conducted after the Effective Date shall be as follow:
Gregg Shafter will continue as President, on a contractual basis, with no
salary, commencing October 15, 1999. Mr. Shafter shall be paid on a contractual
basis through a retainer at slightly less than 50% of his previous salary for a
period not to exceed 6 months. Mr. Shafter will not be in the Denver office,
except as required.
Richard Blubaugh will remain as Executive Vice President. Mr. Blubaugh
shall be present at the offices in Denver. Mr. Blubaugh shall be paid his
current salary through the meeting of shareholders to be held after the
Effective Date of the Plan and shall be compensated on a contractual basis
through retainers thereafter as set forth in the Plan. Mr. Blubaugh shall
oversee the divestiture of Moab, Gold Bar and Grassy Mountain and pursuit of the
CGL recoveries.
James R. Jensen will remain CFO and Secretary of the Company. In lieu of
his salary, Mr. Jensen shall be paid on a contract basis with a flat rate
retainer at a 30% reduction from his previous salary. Mr. Jensen's
responsibilities include SEC compliance and financial reporting.
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<PAGE>
Janet Wilson will remain as the principal accountant at her current salary
with responsibilities to include accounts payable, and general office
management.
Don Canepa will remain as General Manager at Gold Bar on a contract basis
with a flat rate retainer at a 30% reduction from his previous salary until such
time as there is no longer a need for a representative at Gold Bar.
Dale Edwards will remain as Radiation Control Expert at Moab with no
reduction in salary through November. If services are required further for the
transfer of the Moab Assets to the Reclamation Trust a contract will be
negotiated for services but in no event will services extend beyond December 31,
1999.
Greg French will remain as Senior Geologist under contract with a flat rate
retainer at a 30% reduction from his previous salary.
Mario Caron will continue under contract to oversee the operations of
Arisur.
AGMI and APMI
-------------
Gregg B. Shafter, whose qualifications are discussed above is the President
of AGMI and APMI. James R. Jensen, whose qualifications are also discussed
above is the CFO/Secretary/Treasurer of AGMI and APMI.
4. EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by the Company, for
the year ended December 31, 1998, to Messrs. Gregg B. Shafter, Richard E.
Blubaugh and James Jensen, the executive officers of Atlas.
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
------------ ---------------
- ---------------------------------------------------------------------------------------------------------
Name and Principal Year or Salary Bonus Other Annual Stock Options All Other
Position Period Ended Compensation Compensation
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gregg B. Shafter, Dec. 31, 1998 $108,505 $-- $1,546 -- 6,510
President
- ---------------------------------------------------------------------------------------------------------
Richard E. Dec. 31, 1998 99,194 -- 2,372 -- 5,951
Blubaugh,
Executive VP
- ---------------------------------------------------------------------------------------------------------
James R. Jensen Dec. 31, 1998 76,303 -- 1,335 -- 4,578
CFO
- ---------------------------------------------------------------------------------------------------------
</TABLE>
5. TRANSFERS BETWEEN RELATED ENTITIES
There are obligations owing between Atlas and its wholly owned
subsidiaries, AGMI and APMI, both prepetition and postpetition. From December,
1996 through the filing of their Chapter 11 petitions, AGMI and APMI did not
maintain separate checking accounts. Arisur
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<PAGE>
maintains its own checking accounts. Atlas paid the obligations of AGMI and
APMI, separately accounting for the obligations of each entity through cost
codes and offsetting obligations by amounts received. The prepetition
intercompany receivables are calculated as of January 26, 1999, the date of the
bankruptcy filings by APMI and AGMI. Atlas Corporation is a creditor of APMI
holding a prepetition unsecured claim of $26,753,941. APMI is a creditor of AGMI
holding a prepetition unsecured claim of $11,867,299. AGMI is a creditor of
Atlas holding a prepetition unsecured claim of $4,488,260. In addition, Atlas
has paid postpetition obligations of AGMI and APMI. As of August 31, 1999, AGMI
owes Atlas $146,923 which is a postpetition administrative claim. As of June 30,
1999, APMI owes Atlas $206,985 which is a postpetition administrative claim. The
only inter-company obligations arising between Atlas and Arisur are that Atlas
has guaranteed the loan obligation to CAF and further that Atlas has advanced
$793,000, including advances postpetition in the amount of 197,000. The CAF loan
documents preclude Arisur from repaying the Atlas obligations as long as there
is a default under the CAF loans. Atlas does not contemplate that the default
under the CAF loan will be cured unless a renegotiated loan agreement can be
reached.
I. COMPETITION
The Companies compete with substantially larger companies in the
acquisition of properties and the production and sale of metals. The Companies
do not believe that they or any other competitor is a material factor in these
markets, and the price received for production depends almost entirely upon
market conditions over which they have no control. The Companies believe that
they can promptly sell at current market prices all of the metals that they can
produce.
III. EVENTS LEADING TO FILING OF CHAPTER 11
Atlas
-----
There are several factors which precipitated the Chapter 11 filing by
Atlas. In 1998 Atlas experienced severe cash flow problems making the Chapter
11 filing necessary as a result of several things. First, Atlas had negotiated
a sale of its interest in Cornerstone which was supposed to close in May 1998
which did not close. Although Atlas finally negotiated a sale of its interests
postpetition, the inability to close the sale in May deprived Atlas of critical
operating capital. Also, the Cornerstone operations had failed to perform as
originally designed, (which resulted in a lawsuit with the principle
construction engineer, Wyant Machinery, as discussed herein) contributing to the
cash flow problems.
Second, as discussed above, Atlas has significant environmental liabilities
arising from its operations of the Moab Utah Site which, without an approved
reclamation plan and agreement between NRC, Utah and others, precluded it from
reorganizing its obligations outside of a Chapter 11 proceeding. Although the
Debtor had complied with regulatory requirements and engaged in negotiations
with the NRC and Utah, no significant progress had been made toward resolving
Utah's concerns about closing the Moab Utah Site until the filing of the
petition. Prior to the filing of the petition, Atlas expended significant
resources, (more than $1 million per year including legal fees)
-40-
<PAGE>
on compliance and attempts to reach an agreement with the NRC and Utah regarding
the reclamation.
Atlas was also engaged in costly litigation, including the litigation with
Wyant Machinery, the Goldschmidts and the Shipes Parties. The legal fees
incurred by Atlas in the pending litigation and in conjunction with the
negotiations regarding Moab approached $50,000 per month.
Finally the decline in metal prices reduced its revenues and contributed to
its cash flow problems.
By September 1998, Atlas had a number of obligations it was unable to
repay. Atlas had issued convertible debentures in 1993 (which Lindner Dividend
Fund later purchased) which matured on September 20, 1998 with an obligation
owing of $3,500,000. Atlas was unable to pay the obligations arising from the
maturing debentures. Atlas was also in default and unable to pay a number of
other obligations as a result of insufficient cash flow.
The Chapter 11 proceeding was filed to enable the Debtor to resolve its
environmental liabilities, resolve other obligations, restructure its operations
and sell certain non-core assets free and clear of liens retaining value for its
creditors when a sale might not be possible without this protection for a
purchaser.
AGMI
----
Prior to the filing of the AGMI and APMI Chapter 11 cases, Atlas, AGMI and
APMI believed that a sale of the Gold Bar property was in the best interests of
the creditors of the estates. APMI and AGMI were not operating the Gold Bar
property. There are existing environmental claims associated with the Gold Bar
property. The Chapter 11 proceeding was filed for AGMI because it was believed
that the protections afforded to a prospective purchaser under the Chapter 11
proceeding may be the only way to realize value for the Gold Bar property.
Although the property may not be sold until 1-2 years after confirmation of the
plans of reorganization, through dismantling of the mill and recovery under the
Agreement with Vengold, Inc., discussed previously herein, the Debtors believe
that the Chapter 11 proceedings were the best way to preserve the value of the
assets.
APMI
----
Atlas, and APMI also believed that a sale of APMI's interests in Gold Bar
and Grassy Mountain properties may be in the best interests of the creditors of
the estates. APMI owned the exploration portion of Gold Bar and the Grassy
Mountain property. APMI is not currently operating either property. There are
also existing environmental claims associated with the Gold Bar property and
Grassy Mountain. The Chapter 11 proceeding was filed for APMI because it is
believed that the protections afforded to a prospective purchaser under the
Chapter 11 proceeding may be the only way to realize value for the Gold Bar
property and/or Grassy Mountain properties.
-41-
<PAGE>
IV. OPERATIONS SINCE FILING OF CHAPTER 11
Atlas
------
Since the filing of its Chapter 11 petition in September 1998, Atlas has
been pursuing the following: (1) sale of its interests in Cornerstone; (2)
resolution of all environmental liabilities, specifically to permit it to divest
itself of the Moab Utah Site and eliminating future liabilities; (3) seeking to
divest itself of certain assets which are deemed to be unnecessary to the future
of Atlas; and (4) refinancing and developing the business of Arisur in Bolivia.
The first item has been accomplished. Atlas has successfully sold its
interest in Cornerstone. On October 2, 1998, Atlas filed a motion for order
approving the deposit Agreement with Seven Peaks Mining, Inc. ("Seven Peaks")
and approving the sale of its interest in Cornerstone free and clear of liens
pursuant to 11 U.S.C. (S) 363. As part of the Deposit Agreement, Seven Peaks
agreed to purchase Atlas' 61% interest in Cornerstone for $.12 Canadian per
share, or $1,835,922.10 and the assumption of Cornerstone's debt. Seven Peaks
also agreed to deposit $350,000.00 in an interest-bearing account pending
resolution of Cornerstone's litigation with Wyant Machinery ("Wyant"). ACSTAR,
a secured creditor of the Debtor, raised objections to the Motion. However,
Atlas and ACSTAR resolved their differences in a stipulation filed with the
Court. On November 3, 1998, the Court approved the Deposit Agreement. On
November 23, 1998, Atlas filed a Motion to Approve Settlement Pursuant to Rule
9019, which was granted, asking the Court to approve settlement of the Wyant
litigation. The sale of the Atlas' interest in Cornerstone closed on February
11, 1999. The sale of Cornerstone provided Atlas with the necessary financing
to pursue its reorganization.
Prior to closing the Cornerstone sale, Atlas obtained Debtor-in-Possession
financing from Seven Peaks. On September 22, 1998, Atlas filed a Motion
Authorizing Post-Petition Financing and an Emergency Motion authorizing Post-
Petition Financing. The Court granted the Emergency Motion on September 25,
1998, and authorized Atlas to incur up to $250,000 in post-petition debt from
Seven Peaks on an interim basis pending the final hearing. On October 14, 1998,
the Court granted the Motion authorizing post-petition financing and permitted
Atlas to incur up to $750,000 in post-petition debt. The Debtor-in-Possession
financing was repaid from the proceeds of the sale of Atlas' interests in
Cornerstone.
The second significant action taken post-petition is the finalization of
the MUMTA resolving the environmental liabilities associated with the Moab Utah
Site. This agreement was critical to any efforts to reorganize Atlas. The
MUMTA resolves the environmental liabilities disputes, including the treatment
of the claims under the Atlas Plan, the divestiture of Moab Utah Assets and
release of any future liabilities associated with the Moab Utah Site. The MUMTA
was approved by order of the Bankruptcy Court on June 22, 1999.
A number of administrative matters have been taken in the course of the
Chapter 11 proceeding, including obtaining a bar date for filing claims,
publication of the notice of bar date, employment of professionals, extensions
of the exclusivity period and other matters to assist Atlas in its
reorganization.
-42-
<PAGE>
Further, as discussed below, Atlas has settled extensive litigation with
the Shipes Parties and Goldschmidts, the terms of which are discussed below.
The estimated legal fees for defending Atlas in the Shipes Litigation were at
least $300,000.
Atlas has also acted to improve its operations and reduce costs to improve
the Debtor's ability to reorganize. Since the filing of the petition, Atlas has
reduced administrative operating costs. General and administrative costs were
$1,230,000 in 1998 compared to $1,925,000 in 1997. The decrease in 1998 is a
result of vigorous cost cutting measures undertaken in 1998. A new lease was
negotiated for the Company's corporate offices in Denver, reducing monthly rent
from $17,000 per month to $6,000 per month. Corporate staff has been reduced
from 11 in January 1997 to 4 at present resulting in a decrease in salaries and
benefits to $250,000 in at present from $600,000 in 1997. Legal, accounting and
other professional fees were $338,000 in 1998, down from $603,000 in 1997 as a
result of cost cutting efforts. Other overhead costs were also lower as a
result of these measures.
APMI and AGMI
-------------
Atlas, AGMI and APMI negotiated a Mutual Termination Agreement with Barrick
governing the termination of the Asset Purchase Agreement dated June 3, 1997
pertaining to the Gold Bar property (see above).
AGMI sold a piece of equipment referred to as a Thickener, which is an
Eimco Thickener Package complete with a 50' tank, W36P drive, LDM lifting
device, related control instrumentation and electrical control systems (the
"Equipment") which is located at the Gold Bar property. The Equipment is used
to extract metals by mixing a slurry of crushed rock with other chemicals. AGMI
acquired the Equipment in 1990. The Equipment was not utilized in the Debtor's
operations since the application failed and the Equipment is not necessary for
the operation of the Mill. AGMI has sold the equipment to Round Mountain Gold
Corporation ("RMGC") on behalf of RMGC Homestake Nevada Corporation for $70,000.
Two objections were filed to the sale by Eureka County and Gerald E. Davis,
objecting to the sale to preserve their alleged lien interests in the equipment.
A stipulation was reached that the proceeds of the sale would be held in escrow
pending resolution of the lien disputes. The funds have continued to be held in
a separate account at Norwest Bank pending resolution of the disputes regarding
the allowance of the Eureka County tax claims and tax liens against the
equipment. The balance of the account as of July 30, 1999 was $71,193.78.
Court approval was granted for the sale.
AGMI and APMI retained Geographe to assist it in locating prospective
purchasers for the Gold Bar and Grassy Mountain properties. When a purchaser
for Gold Bar was not located, as previously discussed, Atlas, AGMI and APMI
negotiated an agreement with Vengold, Inc., for an option to purchase 603
unpatented and 6 patented mining claims at Gold Bar subject to reservation of a
two percent net smelter royalty interest. APMI retained 55 of the unpatented
lode mining claims due to the belief that thereon exists a sound geologic
target. APMI has already commenced seeking an interested third party to test
this target. The remaining unpatented claims have been rejected with Bankruptcy
Court authority through failure to pay the maintenance fees owing to the Bureau
of Land Management and Eureka County, Nevada.
-43-
<PAGE>
V. PENDING OR POTENTIAL LITIGATION CLAIMS
A. LITIGATION WITH THE GOLDSCHMIDTS AND SHIPES PARTIES
On June 20, 1997 Atlas was served with a Complaint in the matter of Curt
Goldschmidt and Ana Maria Goldschmidt (the "Goldschmidts") vs. Atlas
Corporation; Suramco Metals, Inc.; Arisur Inc.; and Harold R. Shipes and Eileen
A. Shipes in the Superior Court of the State of Arizona. In December 1994
Suramco and Arisur purchased all of the shares of Cia Minera Andacaba S.A.,
which held mining properties in Bolivia. Subsequently, Atlas acquired both
Suramco and Arisur. The Goldschmidts, the former owners of Cia Minera Andacaba
S.A., asserted that the consideration under the purchase agreement was not paid
in full and they were seeking damages in the amount of $800,000 plus expenses.
Subsequent to the Arizona Complaint, in La Paz, Bolivia, the Goldschmidts
initiated civil and criminal actions to seek satisfaction of the purported
damages. On June 25, 1998, Atlas entered into a settlement agreement and mutual
release of all claims (the "Settlement Agreement") with the Goldschmidts. The
Settlement Agreement provided for the payment by the Company of $80,000 to the
Goldschmidts on the date of signing of the Settlement Agreement. In addition,
at the election of the Goldschmidts, Atlas agreed to purchase from the
Goldschmidts 2,000,000 shares of Atlas' stock for $400,000 on September 11, 1998
and 250,000 shares of the Company's stock for $50,000 on December 11, 1998. In
return the Goldschmidts released all claims against Atlas, its subsidiaries and
affiliates. Atlas defaulted on payment of the $400,000 due on September 11,
1998 attributable principally to the failed sale of Cornerstone. Further, there
were issues as to whether the Goldschmidts had complied with their release
obligations under the Settlement Agreement.
On September 19, 1997 Atlas filed a Complaint in U. S. Federal District
Court in Colorado for breach of contract and for indemnity against H. Roy
Shipes, (at the time a director of Atlas), et. al. ("Shipes Parties"). Atlas
claimed that the Shipes Parties were duty bound to defend and indemnify the
Company as a result of the Goldschmidt claims against Atlas (see above). The
duty arose out of the contract with the Shipes Parties to sell Suramco to the
Company. On October 1, 1997 the Shipes Parties filed a claim against Atlas.
The Complaint sought damages for alleged misrepresentations in connection with
the purchase of 50% of Arisur from the Shipes Parties.
On January 25, 1999, Atlas, the Goldschmidts and the Shipes Parties
executed a Settlement Agreement, which was approved by the Court and closed in
April 1999. Under the terms of the Agreement, the Company agreed to allow a
general unsecured claim in its bankruptcy proceeding of $580,000 to the Shipes
Parties and $450,000 to the Goldschmidts. In addition, the Shipes Parties will
be allowed a subordinated unsecured debt claim of $2,250,000. The Settlement
Agreement provided for complete releases by all parties of any and all claims
which could have been brought in the proceedings. Further, the parties agree
that the Court shall have exclusive jurisdiction over their existing claims
against Atlas and Arisur. Curt and Ana Maria Goldschmidt agreed to waive the
right to pursue any action against Atlas, Suramco Metals, Inc., Arisur, Inc., or
any other subsidiary or affiliate of Atlas which has been or could have been
brought in the Courts in Bolivia or the Courts of the United States, except with
respect to events which occur or causes of action
-44-
<PAGE>
which may accrue subsequent to the date of the Settlement Agreement. Atlas has
been advised by its Bolivian counsel that the settlement is finalized, effective
and of record in Bolivia.
The Settlement Agreement settled many problems, the least of which was
complex international litigation which counsel for Atlas estimated would cost at
least $300,000 to defend.
B. LITIGATION WITH GERALD DAVIS
The Debtors filed an adversary proceeding against Gerald Davis, who is a
former officer and director of the Companies. Mr. Davis resigned in December,
1996. In January, 1997, Mr. Davis and Atlas Corporation entered into a
Resignation Agreement, as amended, pursuant to which Atlas Corporation agreed to
pay Davis as compensation for his termination of employment the sum of
$325,656.96 plus various options which have expired worthless. In and around
August 1997, Davis contended that Atlas was in default of its obligations under
the Resignation Agreement and Amendment to the Resignation Agreement. Atlas
denied the claims. In and around August 1997, Davis commenced an arbitration
proceeding entitled In re the Matter of Arbitration between Gerald E. Davis v.
Atlas Corporation, No. 77 160 00221 97. On or about April 8, 1998, Atlas
Corporation and Davis entered into a Release and Settlement Agreement. Under
the terms of the Settlement Agreement, Atlas agreed to pay Davis the sum of
$215,000 in cash represented by $15,000 in certified funds and a Promissory Note
in the amount of $200,000 ("Promissory Note"). On or about April 8, 1998, Atlas
executed a Deed of Trust, pursuant to which Atlas conveyed its interest in the
Gold Bar property to Davis to secure its obligations under the Promissory Note.
AGMI and APMI are not parties to the Resignation Agreement, the Amendment to
Resignation Agreement, the Settlement Agreement, the Promissory Note, the Deed
of Trust and the Security Agreement. AGMI and APMI are the legal owners of the
Gold Bar property. A dispute arose in the course of the Chapter 11 proceedings
through the application by AGMI to sell a piece of equipment located on the Gold
Bar property as to whether Davis has a valid lien against the assets which the
Companies believe are owned by AGMI and/or APMI. The Debtors commenced an
adversary proceeding against Davis asserting claims under Section 506 to
determine extent and validity of liens and further to void transfers under
Sections 544, 547 and 548 of the Bankruptcy Code.
Mr. Davis filed counterclaims in the litigation asking that the Court
substantively consolidate the estates of Atlas, AGMI and APMI, or that the
separate corporate identities be disregarded. The counterclaims further seek
reformation of the deed of trust, equitable liens or constructive trust to
provide Mr. Davis with a security interest in the Gold Bar assets and seeks
claims for breach of contract, breach of warranty and misrepresentation. Atlas,
AGMI and APMI filed a Motion to Dismiss the counterclaims for substantive
consolidation, alter ego, reformation of the deed of trust, constructive just
and equitable lien and has denied the remaining claims for relief.
The Debtors and Mr. Davis have reached a stipulation which resolves the
claims of the parties in the Adversary Proceeding and other matters pending in
the Chapter 11 proceedings. Under the Stipulation, the parties have agreed
that Davis' claim under the Plans shall be treated as follows: Atlas will pay
Davis $5,000 upon the Effective Date; he shall receive a secured claim against
certain portions of the Gold Bar property in the amount of $60,000 to be paid
from the proceeds of any sale or joint venture of the Gold Bar property after
satisfaction of the tax claims of Eureka County and
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any administrative expense claims; the balance of his allowed claim, $120,246
shall be treated as a Class 10 unsecured claim against Atlas; the parties will
mutually release any claims which were or could have been raised and the
Adversary Proceeding shall be dismissed. The Bankruptcy Court entered an Order
on August 24, 1999 approving the settlement agreement.
C. ASBESTOS CLAIMS
Atlas has been named as a defendant in a number of asbestos suits for
bodily injury or wrongful death over the past 10 years. As of the bar date,
five asbestos related claims have been filed with the Court. The cases are
being defended by counsel for Atlas' insurance companies. Based on the limited
period of operation (1963 through 1967) it is unlikely that many of these
plaintiffs were exposed to or injured by asbestos produced by Atlas. The first
is Tevita Louie v. Manville Corporation asbestos Disease Compensation Fund et
al., Los Angeles Superior Court Case NO. BC 196 960. Lolie claims his exposure
occurred between 1979 and 1990 in Riverside California. Although the amount
demanded exceeds $10,000, Atlas believes that counsel for the insurance carrier
will be able to limit the Lolie matter to a nuisance fee for the Debtor. The
second case, Louise Stokley et al. V. Johns Manville Corporation, Atlas
Corporation, et al. Jackson Mississippi Civil Action No. 251-96-695 CIV, is a
wrongful death suit with a demand against Atlas of $500,000. The deceased was
employed by Armstrong Cork Company, now known as Armstrong World Industries, at
its Jackson Mississippi plant manufacturing flooring tile and linoleum flooring.
Another suit was filed after the bar date and was later dismissed as to Atlas.
Tanda Blackwell is the daughter and lead plaintiff in this wrongful death
suit filed by the heirs of William McCroy, deceased. Los Angeles Superior Court
Case No. BC 178 912. This case was dismissed by counsel for plaintiff in
September 1988, in exchange for a waiver of costs by the Debtor.
Eloise Monroy is the wife and lead plaintiff in this wrongful death suit
filed by the heirs of Raul Monroy, deceased. Los Angeles Superior court Case
No. BC 178 912. This case is subject to dismissal by way of Motion of Summary
Judgment since the plaintiffs have been unable to identify the Debtor as the
source of any asbestos to which the decedent was exposed. Plaintiff's attorney
may voluntarily dismiss the Debtor, according to Bonne, Bridges, Mueller,
O'Keefe & Nichols, counsel for Chubb Insurance Companies, Atlas' insurance
carrier, who is defending the action, or a Motion for Summary Judgment may be
filed.
John Waggoner and Dorothy Waggoner v. Raybestos-Manhattan, Inc. et al. San
Francisco Superior Court No. 995856. Mr. Waggoner, 51, is living with
mesothelioma and is currently employed by the California Highway Patrol. Mr.
Waggoner claims that as a patrolman in the Coalinga area from 1978 to 1983, he
was exposed to asbestos released through mining activities in the area. Since
the Debtor's asbestos mining activities occurred from 1961 to 1967, counsel
suggests that unless the plaintiff is able to show that the Debtor's asbestos
made its way into certain products to which he was exposed, there is the
potential for a voluntary dismissal for the Debtor, or the insurance counsel
will bring a Motion for Summary Judgment. The claim is in excess of $500,000.
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In addition, claims have been filed by four claimants subsequent to the bar
date for filing claims against Atlas. The first is brought by Mary Sandoval
asserting damages in the amount of $1,500,000. The state court litigation was
filed after the filing of the petition. Upon demand of counsel, Atlas has been
dismissed from the proceeding.
Three additional claims have been filed after the bar date by Jennie
Sanjurgo, Mary Engman and Stella Chuka each asserting damages in the amount of
$1,500,000. Atlas plans to dispute these claims and have them treated as late
filed claims under the Plan.
A list of the Class 9 claimants is attached hereto as Exhibit H.
D. CLAIMS AGAINST INSURANCE COMPANIES FOR DAMAGES ARISING FROM
ENVIRONMENTAL LIABILITIES
Excluding operations at Coalinga, California, Atlas may have claims under
certain of its insurance policies which cover damages from environmental
liability claims. Many historical general liability insurance policies covering
operations have been found to cover claims arising from environmental
contamination or asbestos liabilities. Many policies in the 1950s, 60s and 70s
provide for broad coverage which is favorable to Atlas as they did not include
the absolute pollution exclusions which have been included in policies since
around 1986. Many of these policies pay claims based upon the date the damage
occurred as opposed to the date that the claim was made. Atlas at one time had
claims arising from its operations at Coalinga, California. Atlas filed claims
under that coverage and commenced a recovery action in or around 1991 and
ultimately settled with all the carriers identified by legal counsel. These
proceedings were completed around 1993-1994 through settlements which released
the carriers from further liability connected with the Coalinga California
operation.
The difficulty in pursuing the recoveries is in evaluating, and in some
cases locating the historic insurance policies, and determining the amount of
available coverage. Atlas has not done an independent analysis of these claims.
The initial valuation of these claims was obtained through the due diligence
provided to Atlas by Emsource, Inc. ("Emsource") in its due diligence report.
Emsource in conjunction with Harding Lawson Assoc., submitted a proposal to
Atlas of a third party reclamation program for closure of the Moab Utah Site.
Emsource obtained an estimate of the potential range of recoveries from Risk
International which range from $1.5 million to $7 million recoverable over a one
to four year period of time. Atlas has engaged Risk International to perform a
coverage and claim review to ascertain the amounts of available coverage and to
estimate the recoverable amount, currently estimated at approximately $3.0
million. Atlas plans to pursue any available coverage.
Atlas has filed an application which is pending on notice to retain Risk
International as its claims and settlement representative to pursue the CGL
claims. Under the Engagement Agreement with Risk International, Atlas' expenses
are capped at $125,000. Atlas will advance the first $30,000 in expenses, not
to exceed $10,000 per month. The balance, $95,000 will be funded out of early
settlements. After Atlas has funded $125,000 of expenses, Risk will be
responsible for all additional expenses. The first $150,000 of settlement
proceeds shall be allocated totally to Atlas. The next
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$190,000 shall be allocated one-half to Atlas and one-half to Risk to serve as
an expense pool. Risk shall be compensated on a contingent fee of thirty-five
percent (35%) of the settlement proceeds. As a means of enhancing Atlas' early
cash flow and funding the $125,000 expense pool, Risk has agreed to temporarily
forebear receipt of its 35% share of the first $340,000. The unpaid 35% of the
initial $340,000 ($119,000) shall be paid out of Atlas' share of subsequent
settlements at a rate not to exceed 50% of Atlas' share until Risk has received
35% of all settlements received. The legal fees for any litigation commenced by
Atlas, the Insureds, or any of the Insurance companies shall be included within
or deducted from Risk's 35% of the recoveries.
E. DISPUTE WITH PENSION BENEFIT GUARANTY CORPORATION
REGARDING TERMINATION OF THE DEFINED BENEFIT PLAN
As discussed herein, Atlas filed Atlas a PBGC Form 600, Notice of Intent to
Terminate, Distress Termination, with the Pension Benefit Guaranty Corporation
("PBGC") to terminate the Defined Benefit Plan. The proposed termination date
for the Defined Benefit Plan was August 15, 1999. The PBGC objected to the
notice on the grounds that it did not include Suramco and Arisur. Atlas filed a
second Form 600 on August 25, 1999 and Notice of the Intent to Terminate was
served upon the participants of the Defined Benefit Plan in compliance with the
procedures of the PBGC. The proposed termination date under the new notice is
October 27, 1999. The PBGC in response to the Notice filed in June 1999,
asserted that Atlas had not met the requirements under ERISA for a distress
termination. The PBGC has also opposed the Motion filed by Atlas for authority
to terminate the Defined Benefit Plan.
There are disputes between Atlas and the PBGC as to whether the Plan may be
terminated. If the Plan does not terminate, the obligations under ERISA will
continue and the Debtors will not be discharged or released from any liability
with respect to the Defined Benefit Plan and post-confirmation neither the PBGC
nor the Defined Benefit Plan would be enjoined from enforcing the obligations.
The Atlas Parties maintain that they have met the standards for a distress
termination of the Plan and dispute the PBGC's positions that the Defined
Benefit Plan may continue post-confirmation.
In addition, there are disputes between Atlas, AGMI and APMI regarding the
claims held by the PBGC arising from the termination of the Defined Benefit
Plan. Preliminary valuations from actuaries retained by the Plan indicate that
the assets of the Defined Benefit Plan will be sufficient to pay benefits up to
the level guaranteed by the Pension Benefit Guaranty Corporation ("PBGC"). The
Defined Benefit Plan has asserted an unsecured claim against Atlas in the
approximate amount of $631,804 for funding deficiencies prior to 1997, the year
benefit accruals were ceased. The PBGC has disputed the valuations by the
Plan's actuaries and certain reductions in benefit payments. The PBGC has
asserted that the Plan is underfunded by approximately $2,004,900 as of an
assumed termination date of September 22, 1998. The PBGC has also filed claims
against Atlas, AGMI and APMI for unpaid minimum funding deficiencies of
$527,614. In addition, the PBGC has asserted claims against Atlas, AGMI and
APMI in an unliquidated amount for unpaid pension termination insurance premiums
and related charges which the PBGC asserts is entitled to priority under Section
507(a)(1) of the Bankruptcy Code. Finally, the PBGC has asserted a claim for
penalties against Atlas in the amount of $282,800 for failure to provide timely
notice of the Chapter 11 filing under
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ERISA which the PBGC asserts is entitled to priority. Under prevailing case law
Atlas believes any claim of the Defined Benefit Plan or the PBGC is an unsecured
claim, including the penalty claims and insurance premiums which should be
treated as a Class 10 claim under the Atlas Plan. The PBGC has asserted that the
unfunded benefit liabilities are pre-petition taxes entitled to priority under
section 507(a)(8) of the Bankruptcy Code up to 30% of the collective net worth
of Atlas and its subsidiaries. The Atlas Parties dispute the PBGC's position and
maintain that under prevailing law that the claims are to be treated as
unsecured claims. The claims asserted by the PBGC shall be treated as contested
claims under the Atlas, AGMI and APMI Plans pending resolution of the disputes
before the Bankruptcy Court.
VI. PRE-PETITION AND POST-PETITION FINANCIAL DISCLOSURES
Attached hereto as Exhibit A is the Audited Consolidated Financial
Statements for the Debtors Operations for the year ended 1998. Attached as
Exhibit B is the form 10QSB filed for the period ended June 30, 1999. Attached
as Exhibit C are the projections for Atlas for 1999, 2000, 2001-2004, the cash
flow projections for Arisur including the projected consolidate balance sheet at
the Effective Date, and the projected Income Statement for five years. Attached
hereto as Exhibit D is the assumptions utilized in preparing the projections.
Attached hereto as Exhibit E is a list of Atlas' leases and executory contracts
including the Debtor's intentions regarding assumption or rejection.
VII. TREATMENT UNDER PLANS OF REORGANIZATION
The following is a description of the treatment of the classes under the
Atlas Plan, the AGMI Plan and the APMI Plan. The administrative matters which
are the same or substantially similar under each of the Plans are discussed
following the treatment of the classes under each Plan. You should review the
Plan of Reorganization carefully. Classes 1-19 have been reserved for the
classes under the Atlas Plan. Classes 20-39 have been reserved for classes
under the APMI Plan. Classes 40 through 59 have been reserved for classes under
the AGMI Plan.
A. ATLAS PLAN OF REORGANIZATION
The Plan has been provided to all creditors or possible creditors known to
Atlas. The Atlas Plan should be read carefully and independently of this
Disclosure Statement. The following analysis of the Atlas Plan is intended to
provide a context for understanding the remainder of the Disclosure Statement.
Unless otherwise indicated, the claims of all creditors are impaired to some
extent. The following is a brief description of the treatment of each of the
classes of creditors and interest holders under the Atlas Plan.
As described more fully herein, the Atlas Plan provides for the acquisition
of all assets of Atlas by the Reorganized Atlas, free and clear of all liens,
claims and interests of creditors, equity holders, and other parties in interest
except as otherwise provided in the Plan.
The Atlas Plan provides for the transfer of the Moab Utah Site assets under
the MUMTA to a Reclamation Trust in satisfaction of the outstanding
environmental liabilities arising from Atlas'
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operation of the Moab Utah Site. The Atlas Plan provides for distribution of
cash held on the Effective Date net of funds reserved for working capital to the
creditors in order of priority. The Atlas Plan further provides for
distributions of cash based upon 75% of the funds received by Atlas from the
sale of the Grassy Mountain and Gold Bar properties and 10% of the funds
received on account of the CGL claims up to $1,500,000 and 50% of the proceeds
thereafter. The Atlas Plan further provides for issuance of stock equal to 67.5%
of the Reorganized Atlas to the unsecured creditors on a pro rata basis. If the
Atlas Plan is confirmed by acceptance of all classes, shareholders holding 1,000
or more shares of common stock will retain their shares, diluted to 15% of the
Reorganized Atlas preserving the status of Atlas as a publically traded company
and to utilize its net operating losses for federal income tax purposes. If the
Atlas Plan is confirmed by cramdown, all common stock issued and outstanding
will be voided. The Cash Flow Projections are based upon the Debtor's historical
cash flow, its operations during the Chapter 11 and management's expectation of
future cash flow. The assumptions for the Statement of Projected Operations and
Cash Flow Projections are set forth in Exhibit C and are discussed further
herein. Attached hereto as Exhibit M are the projections of the percentages of
the stock to be issued to the Class 10 and 12 creditors under the Plan. Exhibit
M also reflects the percentages to be issued to insiders of the Debtors.
The stock to be issued under the Atlas Plan to the creditors treated under
Class 10 and 12 shall be issued under the exemption from registration under the
federal securities laws set forth in 11 U.S.C. (S)1145(a)(1) as stock of Atlas
is to be issued in exchange for claims held by creditors against it. Pursuant to
11 U.S.C. (S)1145(c) the stock is issued with an exemption from registration as
if the stock were issued in a public offering. Accordingly, there are no
restrictions on resale of the stock issued to the creditors treated under Class
10, and 12. The Plan also contemplates that stock will be issued under the
management compensation plan. The stock to be issued under the Management
Compensation Plan is not exempt from registration under the provisions of 11
U.S.C. (S)1145 and therefore will be issued as restricted stock pursuant to the
requirements of Rule 144 of the Rules of the Securities Exchange Commission with
a minimum holding period of one year. The stock issued under the Management
Incentive Program may not be transferred, sold, pledged or hypothecated for a
period of one year from the date of issuance. The stock issued under the
Management Compensation Plan will not be registered under the Securities Act of
1933 and may not be transferred after the one-year period unless covered by an
effective registration or exemption from such registration or qualification
requirements are available.
The percentages of stock to be issued to creditors, shareholders and
management under the Plan are based upon determinations of value and incentives
to facilitate Atlas' reorganization. The 12.5% paid in the event of a
consensual plan under the management incentive program was negotiated with the
Committee and is designed to provide an incentive to management to ensure
continuity of management and leadership given the reductions in salary and
termination of certain benefits, such as severance agreements. The fifteen
percent retained by existing shareholders under a consensual plan is believed to
be reasonable to preserve the value of Atlas as a public entity and to preserve
the existing market for the stock.
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Atlas estimates that at confirmation it will need approximately $98,802.77
to make the payments due to the Class 1 and 2 claimants on the Effective Date as
follows:
Class 1 $80,000.00
Class 2 $13,802.77
Class 13 $ 5,000
The amounts owing to Class 1 claimants are the fees and expenses owing to
special counsel which have not been approved by the Court through fee
applications.
1. CLASSES OF CLAIMS UNDER THE ATLAS PLAN
Class 1. Allowed Administrative Expense Claims as defined in 11
U.S.C. (S) 503 of the Code against Atlas. To the extent the Class 4 and/or 5
creditors have or could have asserted administrative expense claims they shall
be treated under Class 4 or 5 respectively of the Atlas Plan. All fees payable
to the U.S. Trustee shall be paid in full as they become due.
Class 2. Unsecured Impaired Claims for Wages against Atlas to the
extent of $4,300 pursuant to 11 U.S.C. (S) 507(a)(3)(A) and (B). Class 2 Wage
Claims shall include claims for unpaid wages, including severance pay or
vacation pay earned but unpaid within ninety (90) days prior to the filing of
the petition.
Class 3. Any allowed unsecured and/or secured priority tax claims of
the Internal Revenue Service, Colorado Department of Revenue and any taxing
authority holding claims under 11 U.S.C. (S)507(a)(8) against Atlas.
Class 4. Impaired claims of NRC and Utah arising from the Mill
Operations and the Cleanup Obligations of Atlas at the Moab Utah Site.
Class 5 a. Secured Claims of ACSTAR.
Class 5 b. Unsecured and Administrative Claims of ACSTAR.
Class 6. Allowed Secured Claims against Atlas.
Class 7. Unimpaired Claims of Retirees against Atlas for Medical
Benefits.
Class 8. Unimpaired Claims of Holders of Unexpired Leases and
Executory Contracts against Atlas.
Class 9. Impaired Personal Injury or Tort Claims against Atlas.
Class 10. Impaired Claims of General Unsecured Creditors of Atlas.
Class 11. Impaired Claims held by AGMI.
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Class 12. Impaired Claims of Subordinated Debt.
Class 13. Impaired Claims held by Gerald E. Davis pursuant to the
terms of the Settlement Agreement dated July 9, 1999.
Class 14. Impaired Claims held by the Internal Revenue Service,
Colorado Department of Revenue and any other taxing authority for penalties not
related to actual pecuniary loss.
Class 15. Impaired interests of Atlas common stockholders holding
less than 1,000 shares.
Class 16. Impaired interests of Atlas common stockholders holding at
least 1,000 shares or more.
Class 17. Impaired interests of any holders of Warrants and Stock
Options issued by Atlas Pre-Petition.
Class 18. Late filed claims.
2. TREATMENT OF CLAIMS NOT IMPAIRED UNDER THE ATLAS PLAN
Class 1. Allowed Administrative Expenses pursuant to 11 U.S.C. (S)503.
Class 1 Allowed Administrative Expenses as defined by 11 U.S.C. (S)503 shall be
paid in cash in full on the Effective Date or shall be paid upon such other
terms as may be agreed upon by Atlas and the respective holder of the claim for
Administrative Expenses. The Class 1 Administrative Expenses include the
quarterly fees owing to the Office of the United States Trustee pursuant to 28
U.S.C. (S)1930(a)(6) accruing on or before the Effective date which shall be
paid by the Effective Date. All fees payable to the U.S. Trustee program shall
be paid as they become due. Notwithstanding an assertion by the Class 4 or
Class 5 claimants that their claims are entitled to priority under Section
503(b) of the Bankruptcy Code, the Class 4 and 5 claims shall be treated under
Class 4 and 5 respectively of this Plan and not as Class 1 Administrative
Expenses.
The claims of creditors for costs and expenses of administration of the
bankruptcy estate are defined in (S)503 of the Bankruptcy Code and include
professionals retained by the estate including: Sender & Wasserman, P.C.,
counsel for the Debtor; Block Marcus Williams, counsel for the Unsecured
Creditors Committee; special counsel, Freeborn & Peters and Shaw Pittman, Potts
& Trowbridge, and Lang Michner; Gelfond Hochstadt Pangburn & Co., the
independent auditors retained to prepare the audited financial statements for
year end December 31, 1998, and any other professionals retained by Order of the
Court.
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<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Professional Fees and Expenses Paid Accrued Fees and Amount anticipated to
to 8/31/99 Expenses Not Paid be outstanding at
08/31/99 confirmation
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sender & Wasserman 292,126.71 25,029.78 10,000
- --------------------------------------------------------------------------------------------------
Committee Counsel 41,798.79 4,441.42 1,500
- --------------------------------------------------------------------------------------------------
Freeborn & Peters 74,080.30 2,040.00 1,000
- --------------------------------------------------------------------------------------------------
Shaw Pitman 92,234.90 21,172.30 3,500
- --------------------------------------------------------------------------------------------------
Perkins Coie 2,105.81 701.94 0.00
- --------------------------------------------------------------------------------------------------
Lang Michener $ 2,090.35 0.00 0.00
- --------------------------------------------------------------------------------------------------
Strandberg & Cain 12,366.31 5,143.87 2,000
- --------------------------------------------------------------------------------------------------
Gelfond Hochstadt 47,932.00 7,173.88.00 2,000
- --------------------------------------------------------------------------------------------------
Monarch Financial $ 134,000 0.00 0.00
- --------------------------------------------------------------------------------------------------
</TABLE>
Atlas anticipates that a significant portion of the professional fees and
expenses will have been paid prior to confirmation. Atlas believes that the
fees of Debtor's counsel, counsel for the Creditors Committee and the other
professionals retained in the case will have been paid pursuant to Court's Order
establishing the Interim Compensation Procedure pursuant to which the claims 75%
of the fees and 100% of the costs have been paid on a monthly basis and the
remaining 25% has been paid after approval of Interim Fee Applications.
However, certain professionals have not filed or received approval of interim
fee applications seeking approval of the remaining 25% of the fees and those
fees are reflected above and will be due and payable upon court approval of the
application. In addition, it is anticipated that there will be fees accrued by
not approved by fee application for the remaining professionals. Atlas
anticipates that the balance owing to professionals on the date of confirmation
will be $40,000.
In addition to professional fees, Class 1 comprises any post-petition
administrative claims, including trade payables or breach of an assumed lease,
which are allowed as an administrative expense pursuant to Bankruptcy Court
order. Atlas anticipates that at the Effective Date that there will be about
one months operating expenses outstanding or approximately $40,000. Atlas is and
projects to remain current in its post-petition payables. /2/
____________________________
/2/ The Monthly Financial Reports filed by Atlas show post-petition liabilities
which include accrued obligations which Atlas accrues throughout the year even
though they may only be incurred during 2 or 3 months of the year. For example,
the report for July 1999 showed outstanding post-petition liabilities of
$387,005 comprised of $120,363 is actual accounts payable and $266,641 in
accrued liabilities. The accrued liabilities which are not projected to be due
by the Effective Date have not been included in the estimate of administrative
expenses due.
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Further, Class 1 includes any post-petition claims for unpaid taxes,
including withholding. The Debtor does not anticipate that there will be any
administrative expense claims arising from unpaid tax obligations as the Debtor
is and projects to remain current in the payment of these obligations.
Class 1 includes fees owing to the United States Trustee pursuant to 28
U.S.C. (S)1903(a)(6), all of which have been paid currently during the pendency
of the case. Fees owing to the United States Trustee will be current up to the
date of confirmation and outstanding fees that are due will be paid on the
Effective Date.
The PBGC has asserted a claim in the amount of $272,800 in unpaid penalties
for failure to notice the PBGC of a reportable event, the filing of Atlas'
Chapter 11 petition. The PBGC has asserted that its claim is entitled to
administrative priority under Section 507(a)(1) of the Bankruptcy Code. Atlas
disputes the PBGC's position and maintains that under prevailing case law that
the post-petition penalty claim is not entitled to administrative priority. If
the PBGC prevails, Atlas estimates that the Class 1 claims due on the Effective
Date would be $371,602.77
To the extent there are allowed administrative claims of any other nature,
the amount outstanding shall be payable on the Effective Date as an unpaid
administrative expense.
Class 6. Allowed Secured Claims. Class 6 is comprised of the Allowed
-------- -----------------------
Secured Claims against Atlas except for the claims of the Class 4 and 5
creditors. The Class 6 claimants and Debtor shall retain all rights, without
modification, under the notes and related security agreements. The Class 6
creditors rights are unimpaired and shall be paid by Reorganized Atlas in full
in accordance with the terms of their respective agreements.
In the event that Atlas contests the extent, validity or priority of any
security interest asserted by a Class 6 creditor through the filing of an
adversary proceeding or seeks to void any security interest under 11 U.S.C.
(S)(S)544, 547, 548 or 549, the claim of that creditor shall be treated in
accordance with the provisions of Article X of the Atlas Plan. In the event
that a Final Order enters in favor of the claimant upholding the validity of the
secured claim, the claim shall be unimpaired to the extent allowed. If a Final
Order enters holding that there is no valid security interest or voiding a
security interest, the claim shall be treated as a Class 10 unsecured claim,
unless otherwise ordered by the Court.
The Class 6 claims include any allowed secured claims held by the Colorado
Department of Natural Resources, and the Environmental Protection Agency.
Atlas has scheduled an unliquidated secured claim for the Colorado
Department of Natural Resources for clean up costs associated with Atlas' former
lease of the Carter Raymond mine near Gunnison, Colorado. The claim is secured
by ACSTAR Bond #6149 in the amount of $19,400. Atlas believes that the allowed
claim of the Colorado Department of Natural Resources will be zero as the
Colorado Department of Natural Resources did not timely file a proof of claim.
If a claim is allowed, the Department will retain its rights under a portion of
the cash collateral under ACSTAR Bond #6149, with the remainder of cash to
ACSTAR or Atlas.
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The EPA's claim arises from the cleanup obligations of Atlas at the
asbestos mine site in Coalinga California. Atlas, Vinnell Mining and Minerals
and the EPA agreed to a Consent Decree which was entered by the United States
District Court for the Eastern District of California, Fresno Division Civ-F-92-
5373-OWW on October 15, 1992. The Consent Decree required that Atlas and
Vinnell conduct the cleanup of the site which is part of the Atlas Asbestos Mine
Superfund Site in Fresno County, California and to reimburse the United States
for all costs it incurred in conjunction with the site. The EPA billed Atlas
and Vinnell (who are jointly and severally liable) $441,262.67 for the period
from December 1, 1990 through December 31, 1993 and $236,161.50 for the period
from January 1, 1994 through December 31, 1994. In January, 1999, EPA billed
Atlas and TRW an additional $797,274.68 in costs associated with the site. Atlas
and Vinnell disputed these costs and agreed with the EPA to place the disputed
sum in escrow. TRW paid the amounts billed by EPA in January 1999. The balance
of the escrow account as of March 5, 1999 was $764,092.46. Currently, the
balance of the escrow account according to TRW is in excess of $1,560,000. The
EPA has filed a claim asserting a secured claim for the funds in the escrow
account. Under the Plan, the EPA shall retain all rights under the Consent
Decree and the escrow account and the funds in the escrow account shall be
utilized to environmental remediation of the California site, unless the EPA
later determines that less money is actually required, which shall satisfy its
claim against Atlas in full.
Atlas believes that the claim of the EPA shall be the only Allowed Class 6
claim.
Class 7. Allowed Claims of Retirees for Medical Benefits. Class 7 is
-------- ------------------------------------------------
comprised of the allowed claims of Retirees for Medical Benefits as that term is
defined in 11 U.S.C. (S)1114. Atlas or Reorganized Atlas shall fulfill its
obligations under the Retiree Medical Plan in compliance with the provisions of
11 U.S.C. (S)1114. The Class 7 claims are unimpaired. Effective December 15,
1997 the Company terminated the Medical Plan for all current employees, except
for three individuals who were grandfathered. Five retirees already receiving
medical benefits under the Medical Plan were not affected by this change. The
Retirees currently receiving medical benefits and the three grandfathered
employees will continue under the Plan and their rights shall not be modified or
impaired. Since the Medical Plan is secondary to Medicare, the cost to Atlas
from continuing the Medical Plan is expected to be minimal.
Class 8. Executory Contracts and Unexpired Leases. Class 8 is comprised
-------- ------------------------------------------
of the claims held by parties to unexpired leases or executory contracts.
Atlas, prior to the hearing on confirmation, shall file motions to assume or
reject its unexpired leases and executory contracts pursuant to 11 U.S.C. (S)365
and notice under Fed. R. Bankr. P. 2002 and 6006. If Atlas moves to assume the
unexpired leases and executory contracts, the claims shall be treated in
accordance with the order of the Court granting the assumption. Any unexpired
leases or executory contracts for which a Motion to Assume has not been filed by
Atlas prior to the hearing on confirmation shall be deemed rejected. Under the
terms of the lease agreements, in the event that a lease is rejected, the
equipment or property will be returned to the lessor, unless Atlas and the
lessor otherwise agree. Any Class 8 claimant asserting a claim for damages
arising from rejection of a lease shall file a proof of claim with the
Bankruptcy Court by the later of the Effective Date or thirty days after entry
of the Order granting the Motion to Reject or the claim shall be forever barred.
The claims held by holders
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of rejected leases or executory contracts shall be treated as a Class 10
unsecured claim subject to the limitations of Section 502 of the Code.
The Class 8 claims include the unexpired lease of nonresidential real
property in which Atlas is the lessee for the lease of its office space in the
Republic Plaza building described as 370 Seventeenth Street, Suite 3140, Denver,
Colorado 80202 pursuant to a lease commencing December 20, 1997 between
Brookfield Republic, Inc., and Atlas and the Debtor's interests in the lease for
the exploration office in Reno Nevada. The lease for the offices in the
Republic Plaza expires on December 31, 2000. Atlas is current in its post-
petition obligations owing under both leases. Atlas intends to file a motion to
reject the Brookfield lease. Attached hereto as Exhibit E is a list of Atlas'
leases and executory contracts including the Debtor's intentions regarding
assumption or rejection.
3. TREATMENT OF CLAIMS IMPAIRED UNDER THE ATLAS PLAN
Class 2. Unsecured Impaired Claims for Wages to the extent of $4,300.00
pursuant to 11 U.S.C. (S) 507(a)(3)(A) and (B). Class 2 Wage Claims shall
include claims for unpaid wages, including severance pay or vacation pay earned
but unpaid within ninety (90) days prior to the filing of the petition.
Claimants with allowed wage claims shall receive 100% of the wage portion of
their claims without interest up to a maximum of $4,300.00 per claimant on the
Effective Date. Any allowed wage claims in excess of $4,300.00 or which were
incurred prior to ninety days before the filing of the petition shall be treated
as a Class 10 unsecured claim. No employee has a Class 2 Wage Claim which
exceeds $4,300.00.
There are no outstanding prepetition wages since Atlas paid all wages
current to September 22, 1998. The allowance of claims for severance or unpaid
vacation will be limited by Atlas' employment policies and damages from
rejection of the prepetition employment agreements. According to previously
established policy and/or practice, severance pay is not available to employees
who "quit" or terminate their employment with Atlas of their own volition.
Likewise, voluntary termination effectively results in the immediate termination
of health and life insurance benefits (unless the employee elects to continue
health coverage under COBRA within 60 days of termination and submits payment in
an amount covering the time from termination to date of the initial payment).
Also, a distinction exists between an involuntary separation from the Company
due to disciplinary action taken by Atlas (Cause). If an employee is discharged
according to the existing policy ), the employee is not eligible for severance
pay.
Atlas has terminated the prepetition employment contracts of the employees
which include substantial severance obligations of Atlas. Post-petition the
vacation and severance obligations were modified. The employees have Class 2
wage claims for their accrued vacation rights attributable to the 90 days prior
to the filing of the petition which were rejected post-petition and the
rejection of their severance rights.
Vacation
--------
The rate of vacation accrual based on term of employment with Atlas and
maximum vacation hours that may be included in calculation of claim under Class
2, have previously been discussed
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in this Disclosure Statement. According to policy, no employee is eligible to
have more than 1- 1/2 times his/her annual vacation benefit accrued at one time.
However, for the Class 10 claims, Atlas will include the employees earned but
unused accrued vacation plus the transition accrual for vacation earned and
"banked" pursuant to the December 23, 1993 corporate policy memorandum.
Severance
---------
Severance benefits provided by Atlas Corporation are generally of two
categories; the first is by employment contract or written commitment with key
personnel. These will vary from individual to individual and are not available
to all employees. The second category is Atlas' established practice of
providing severance pay for employees who are involuntarily severed from the
Company due to no fault of their own. This practice provides for two weeks pay
for each full year of employment, at the rate being paid at the time the
employee is severed.
For the existing employees, those who have filed a `proof of claim' for
his/her pre-petition vacation and/or severance, Atlas Corporation will recognize
their pre-petition claim for severance even in the event the employee
voluntarily terminates employment. Severance will not be paid if the employee
is terminated with cause. In essence, an employee's pre-petition benefits ended
on September 22, 1998, and will not continue. Post-petition severance practices
have been modified as addressed previously. Given Atlas' position, that
existing employees' pre-petition severance benefits will be recognized, then the
Class 2 claim will consist also of severance benefits, generally up to a maximum
of 2 1/2 days (20 hours) for the ninety days prior to the bankruptcy filing.
The balance of an employee's claimed severance benefit (total minus 20 hours)
will be a Class 10 claim. The severance claims, along with unpaid vacation
claims, will be grouped with all other claims filed by the general unsecured
creditors. This Class 10 claim for existing employees will be recognized by
Atlas in the calculation of payments for this class unless the employee is
terminated for Cause, even in the event an employee voluntarily terminates
his/her employment prior to the bankruptcy being effectively closed and/or
payments dispersed.
Class 2 Summary
Generally, assuming that employee claims consist of vacation and severance,
the Class 2 claims will be the sum of the vacation hours shown above that best
fits the employee's situation and the 20 hours of severance. Thus the range of
potential Class 2 claims will be from 40 to 70 hours at the employee's current
hourly rate of pay. Class 2 benefits will be paid to the employees who filed a
`proof of claim', even if they voluntarily terminate their employment with
Atlas. Only the Class 2 vacation benefit would be paid to an employee who is
terminated with Cause.
Example:
- --------
An employee earning $20.00 per hour whom has worked for the Company 11
years. This person would potentially have 40 hours of vacation earned in the 90
days preceding September 22, 1998, and would have earned a maximum of 20 hours
of severance benefit; resulting in a total of: 60 hours X $20.00/hr = $1,200.00.
The employee could expect to qualify for a Class 2 payment of $1,200.00.
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Estimated Class 2 Claims for Atlas Employees
- --------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Employee Months of 90-Day Period: 90-Day Period: Estimated Amount
Employment as Vacation earned but Severance Earned [hr x $/hr]
of 9/22/98 not taken (hr) (hr)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Blubaugh, Rich* 207 40 20 $2,885.22
- ---------------------------------------------------------------------------------------------------
Canepa, Don 377 50 20 1,498.60
- ---------------------------------------------------------------------------------------------------
Doiron, Jude 62 0.0 20 377.10
- ---------------------------------------------------------------------------------------------------
Edwards, Dale 505 50 20 1,195.62
- ---------------------------------------------------------------------------------------------------
Flanagan, Nancy 16 20 20 596.13
- ---------------------------------------------------------------------------------------------------
French, Greg 171 30.7 20 1,379.78
- ---------------------------------------------------------------------------------------------------
Jensen, Jim* 109 40 20 2,200.96
- ---------------------------------------------------------------------------------------------------
Shafter, Gregg* 84 40 20 3,669.30
- ---------------------------------------------------------------------------------------------------
Wilson, Janet 76 0 0 0
- ---------------------------------------------------------------------------------------------------
</TABLE>
Note: Amounts actually dispersed may vary depending on adjustments to final
accruals.
* Officers qualify for 160 hr per year pursuant to Policy.
** Employment contracts with severance provisions
of Shafter and Blubaugh are rejected.
Estimated Class 10 Claims of Employees
- --------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Employee Months of Vacation Earned Prior to Severance Earned Estimated
Employment as 9/22/98 and Not Taken prior to 9/22/98 Amount ($)
of 9/22/98 (adjusted for transition (adjusted for Class [hr x $/hr]
& Class 2 Benefit) (hr) 2 Benefit) (hr)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Blubaugh, Rich 207 162.7 1,360 $73,711.93
- ---------------------------------------------------------------------------------------------------
Canepa, Don 377 450.5 2,493.3 63,022.34
- ---------------------------------------------------------------------------------------------------
Doiron, Jude 62 0 393.3 7,415.75
- ---------------------------------------------------------------------------------------------------
Edwards, Dale 505 434 3,346.7 64,575.49
- ---------------------------------------------------------------------------------------------------
Flanagan, Nancy 16 56 86.7 2,126.70
- ---------------------------------------------------------------------------------------------------
French, Greg 171 120 1,120.0 33,745.98
- ---------------------------------------------------------------------------------------------------
Jensen, Jim 109 202.7 706.7 33,359.25
- ---------------------------------------------------------------------------------------------------
Shafter, Gregg 84 220 540 46,477.80
- ---------------------------------------------------------------------------------------------------
Wilson, Janet 76 0 486.7 8,657.66
- ---------------------------------------------------------------------------------------------------
</TABLE>
Note: Amounts actually dispersed may vary depending on adjustments to final
accruals, or if an employee claimed costs other than those related to vacation
and severance.
The Class 2 claims total $13,802.77. In addition there are allowed Class
10 claims for employees of $330,922.93. The rejected severance obligations of
Atlas for Messrs. Blubaugh, Shafter and Jensen total $300,000. The employment
contracts were rejected and Messrs. Blubaugh, Shafter and Jensen will not assert
claims against Atlas based upon these terminated contracts.
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<PAGE>
Class 3. Allowed Unsecured Tax Claims pursuant to 11 U.S.C. (S) 507(a)(8).
Class 3 is comprised of Allowed Unsecured Tax Claims under U.S.C. (S)507(a)(8)
excluding claims for penalties not related to actual pecuniary loss. The Class 3
claimants shall receive 100% of their secured and unsecured priority claims in
quarterly installments with interest at 8% per annum. The Class 3 claims shall
be paid in full within six years from the date of assessment. Claims for
penalties not related to actual pecuniary loss shall be treated under Class 14.
Payments to the Class 3 claimants shall commence within fifteen days after the
close of the first calendar quarter ending after the Effective Date of the Atlas
Plan. The Class 3 claimants shall retain their prepetition liens, if any, on
property of the Reorganized Atlas pending payment in full of the Class 3 claims.
Atlas does not believe that there are any allowed Class 3 Claims. The
Internal Revenue Service has filed a proof of claim in the amount of $61,138.43
for penalties for failure to fund the Atlas 1978 Defined Benefit Pension Plan.
The claim asserts a priority claim in the amount of $60,835.71 and a general
unsecured claim in the amount of $302.72. Atlas believes that this is a claim
for a penalty not related to actual pecuniary loss and therefore should be
treated under Class 14 of the Plan. If Atlas and the IRS are not able to agree
on the classification of the claim, the claim shall be treated as a Contested
Claim under the provisions of Article X of the Plan and Atlas will file a
proceeding with the Bankruptcy Court to resolve the issue. No Agreement has been
reached as of the date of this Disclosure Statement regarding the
classification.
Class 4. Allowed Claims of the Nuclear Regulatory Commission and the State
of Utah for Reclamation of the Moab Utah Site. Class 4 is comprised of any and
all claims of any kind or nature, whether filed, unfiled or to be accrued, known
or unknown based upon any and all federal, state, municipal or other
governmental units rules, regulations or statutes whether now in existence or
enacted in the future of the NRC and Utah, or any other agency or entity,
whether public or private, with the same or similar claims for the construction,
maintenance, holding, transfer and/or final disposal and containment of the
Uranium Tailings Pile at the Moab Utah Millsite owned by Atlas on the Moab Land,
or in any way related to the Mill, the Mill Operations or the Moab Cleanup
Obligations, subject to a reduced amount under MUMTA. Atlas' Moab Cleanup
Obligations are secured by the ACSTAR Moab Bond in the amount of $6,500,000.
The Reclamation 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:
. 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
. An Interim Trustee, selected by NRC, shall be appointed for a period not to
exceed 180 days after the Effective Date; and
. NRC and Utah shall continue to negotiate on those areas on which they
cannot reach agreement; and
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. 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
. Atlas shall transfer the monies and assets to the Trust on or before the
Effective Date as are called for under this Plan and the Moab Uranium
Millsite Transfer Agreement, notwithstanding the possibility that the trust
instrument establishing the Trust may be amended after the date of the Moab
Uranium Millsite Transfer Agreement, after the date of the disclosure
statement, or after the Effective Date.
A copy of the terms of the Reclamation Trust Agreement which have been
agreed to between the NRC and the State of Utah is attached hereto as Exhibit N.
There remain terms to be resolved between the NRC and the State of Utah.
The assets transferred to the Trust under the terms of the Plan shall be
held in compliance with the regulations and requirements of the 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 of NRC as stipulated in a Modified License
Transfer Order and relevant Trust documents according to the authority of the
Reclamation Trustee.
On the Effective Date of the Atlas Plan, Atlas and ACSTAR as indicated
shall transfer to the Reclamation Trust the following assets (hereinafter the
"Reclamation Trust Assets") in full satisfaction of any and all claims of any
kind and nature, under Class 4:
1. Title X Receivables for past claims;
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 the Moab Land together with all buildings,
structures, improvements, appurtenances fixtures and easements;
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7. ACSTAR shall transfer the sum of $5,250,000 to the Reclamation Trust in
full and complete satisfaction of the obligations under the ACSTAR Moab
Bond 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
Utah Site and ACSTAR's surety bond issued in connection therewith; the form
of said release to be mutually acceptable to NRC and ACSTAR;
8. Shares representing two and one half percent (2.5%) of the common stock
of the Reorganized Atlas shall be issued to the Reclamation Trust.
Except for item 7, all assets shall be transferred in kind, by way of quit
claim deed or similar document, without representations, warranties or
indemnification rights of any kind.
The Class 4 claims shall be satisfied in full by the transfer of the
Reclamation Trust Assets. NRC and the State of Utah shall waive and release any
and all claims against Atlas, the Reorganized Atlas, ACSTAR and their respective
officers, directors, employees, agents and representatives which shall be
represented by a separate release signed by the NRC and Utah. Upon transfer of
the Reclamation Trust Assets to the Reclamation Trust, the Reclamation Trust
shall assume the obligations of Atlas for the Moab Utah Site and the Moab
License, in accordance with the terms of an Order Modifying and Transferring
Licence to be issued by the NRC, on or before the confirmation of the Atlas
Plan. The Moab 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 Order Modifying and Transferring Licence.
Atlas' obligations shall be limited to executing any and all documents necessary
to effectuate the terms of the Atlas Plan.
Class 5a. Allowed Secured Claims of ACSTAR The Class 5a claims are
comprised of the Allowed Secured Claims of ACSTAR which were secured by certain
letters of credit in the aggregate amount of $5,425,000 plus the Escrow Fund.
The ACSTAR Allowed Secured Claims are based upon the ACSTAR Bonds and ACSTAR
Moab Bond in the aggregate amount of $8,290,000 to secure Moab Cleanup
Obligations and Other Cleanup Obligations. ACSTAR's secured claims against
Atlas, AGMI and APMI are cross collateralized. ACSTAR has drawn on the letter
of credit and is entitled to use the proceeds therefrom in order to pay the
Class 4 creditors and to reimburse itself for the actual amount incurred under
the ACSTAR Bonds for Other Cleanup Obligations and its unpaid fees and expenses.
Furthermore, any amount remaining from the Escrow Fund may be used by ACSTAR for
the same purposes. To the extent any funds remain from the Escrow Fund after
satisfaction of the Other Cleanup Obligations secured by the ACSTAR Bonds and
any unpaid fees and expenses ACSTAR has incurred on said Bonds, such funds shall
be remitted to the Reorganized Atlas. ACSTAR shall retain its rights under the
escrow agreement. The foregoing treatment shall constitute satisfaction in full
of the Class 5a Allowed Secured Claim.
Class 5b. Unsecured and Administrative Claims of ACSTAR. The Class 5(b)
claim is comprised of the unsecured deficiency claim which ACSTAR has for the
Other Cleanup Obligations which it has to pay, and unpaid fees and expenses in
excess of its Class 5(a) Allowed Secured Claim, which claim shall not exceed
$500,000. Any claim by ACSTAR that its claims are entitled to treatment as a
Class 1 Administrative Expense, under any theory, and any potential claim
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<PAGE>
against ARISUR, shall be waived and released. For purposes of voting and
feasibility the Class 5(b) claim shall be estimated at $500,000. ACSTAR's
unsecured claims against Atlas, AGMI and APMI shall collectively not exceed
$500,000. The claims shall be allocated among the estates based upon actual
damage, with the claim applied first to AGMI, then to APMI and then to Atlas.
The actual amount of the Class 5(b) monetary claim allowed against Atlas shall
be paid as a Class 10 Allowed Unsecured Claim. On the later of Effective Date of
the Atlas Plan or at such time as the Class 5(b) creditors claim is actually
determined, it shall receive in full satisfaction of its claim a monetary claims
equal to the actual amount expended for Other Cleanup Obligations, plus fees and
expenses, not to exceed $500,000, which shall be treated as a Class 10 unsecured
claim and shares representing two and one-half percent (2.5%) of the outstanding
common stock of the Reorganized Atlas; provided that such stock shall be held by
a mutually acceptable escrow agent pending determination of ACSTAR's
responsibility for the Other Cleanup Obligations. If Bonds #5659, #5660 and
#5661 for the Gold Bar property are terminated without being called and/or there
is no unsecured deficiency, the Allowed Class 5(b) claim shall be $0 and the
shares which are being held in escrow shall be assigned for distribution
pursuant to the Management Compensation Plan established under the Atlas Plan.
Class 9. Allowed Personal Injury or Tort Claims. Class 9 is comprised of
personal injury and tort claims, including any wrongful death claims or claims
resulting from Atlas' operations or based upon the production of or exposure to
asbestos, uranium or any other materials. All timely filed Class 9 claims are
being defended by insurance defense counsel. The Allowed Class 9 Claims shall
receive the proceeds from insurance coverage, if any, applicable to the
particular claim. Each Allowed Class 9 Claim shall be deemed to have elected to
pursue the insurance coverage, if any, attributable to its Claim, unless they
affirmatively elect otherwise. In the alternative any Allowed Class 9 Claim
may elect at the time of tendering its ballot to be treated as a Class 10
General Unsecured Claim. Upon receipt of such election, the Debtor will file a
claims estimation proceeding, should such a proceeding be necessary. Barring
such election, each such claim shall be estimated at zero for voting purpose and
shall receive nothing from the Reorganized Atlas. Any late filed claims shall
be barred and shall receive only the proceeds of any applicable insurance
coverage.
The Debtor projects that there are only four timely filed Class 9 claims,
all of which are defended by insurance carriers. There are four late filed
claims. The late filed claims shall be treated under Class 18. A list of the
Class 9 claims is attached hereto as Exhibit H.
Class 10. Allowed Unsecured Claims. Class 10 is comprised of the Allowed
Unsecured Claims against Atlas, including any claims of the Atlas Corporation
1978 Retirement Plan (the "Pension Plan"), or its successors and assigns
including the Pension Benefit Guaranty Corporation, for any liability for
funding under the Pension Plan. The Allowed Class 10 creditors shall receive
the following:
(A) All cash held by Atlas sixty days after the Effective Date, net
of the following amounts: (a) up to $800,000 which shall be
retained as working capital; (b) an amount necessary to satisfy
all Class 1 administrative expenses and/or operating expenses
accrued and unpaid as of the Effective Date; and (c) an
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<PAGE>
amount necessary to satisfy all Class 2 claims. The net cash
shall be distributed on a Pro Rata basis between the Class 10,
and 11 creditors, who shall be treated as one class for such
purposes. Atlas does not project that cash held on the Effective
Date will exceed $800,000 and therefore does not anticipate that
there will be any distribution under this provision of the Atlas
Plan. In the event that the Atlas Plan is confirmed by cramdown,
resulting in a voiding in all of the interests of Class 15 and
Class 16 and a resulting percentage increase in the shares issued
to Class 10, the cash withheld from distribution shall be
increased from $800,000 to $1,000,000;
(B) Seventy-Five percent of any and all net proceeds received by the
Reorganized Atlas, directly or indirectly from APMI and/or AGMI
from the sale or disposition of the Gold Bar and/or Grassy
Mountain properties;
(C) Ten percent of the first $1,500,000 recovered by Atlas on account
of its CGL claims and fifty percent of all recoveries in excess
of $1,500,000, net of costs of recovery.
(D) Shares representing sixty-seven and one-half percent (67.5%) of
the common stock to be issued by the Reorganized Atlas. The
stock shall be distributed on a Pro Rata basis between the
creditors treated under Class 10, including the Class 12
creditors for purposes of this distribution to the Class 10, 11
and 12 Creditors who shall be treated as one class for such
purposes.
Under the APMI Plan, Atlas as a Class 28 unsecured creditor is entitled to
its pro rata share of the funds received and distributed under the APMI Plan,
including its pro rata share of the proceeds of the sale of APMI's interest in
the Grassy Mountain and Gold Bar properties and its pro rata share of APMI's
rights as a Class 50 unsecured creditor to the distribution of the proceeds of
the sale of AGMI's interest in the Gold Bar property under the AGMI Plan.
Atlas estimates that the allowed Class 10 Claims total $9,480,253.41 based
upon an assumption that its objections to disputed claims are sustained by the
Court. If the objections to claims are not sustained, the Class 10 claims total
12,053,276.79. Attached hereto as Exhibit I is a list of the claims the Debtor
believes comprise the Class 10 claims, including a statement of those claims
which are disputed. The list has scheduled the severance obligations of the
employees of Atlas at the amounts agreed to between Atlas and the employees. The
percentage of stock anticipated to be distributed to Class 10 creditors is set
forth in Exhibit M attached hereto.
The stock to be issued to the Class 10 creditors as previously discussed
herein shall be unrestricted stock as it shall be issued pursuant to the
exemptions from registration under the federal securities laws in accordance
with the provisions of 11 U.S.C. (S)(S)1141(a)(1) and (c).
Class 11. Claims Held by AGMI. Class 11 is comprised of the claims held
by AGMI for an inter-company payable for cash advanced to Atlas. The allowed
claim of AGMI against Atlas shall first be offset against AGMI's obligations to
APMI which will reduce the accounts receivable
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owed by APMI to Atlas. To the extent there is any amount still owed by Atlas to
AGMI, the net Allowed Class 11 Claim shall be treated on a Pro Rata basis with
the Class 10 creditors. The prepetition intercompany receivables are calculated
as of January 26, 1999, the date of the bankruptcy filings by APMI and AGMI.
Atlas Corporation is a creditor of APMI holding a prepetition unsecured claim of
$26,753,941. APMI is a creditor of AGMI holding a prepetition unsecured claim of
$11,867,299. AGMI is a creditor of Atlas holding a prepetition unsecured claim
of $4,488,260. After setoff, the claim held by APMI against AGMI shall be
reduced to $7,379,039 and the claim held by Atlas against APMI shall be reduced
to $22,265,681. Based upon its estimate of the allowed inter-company claims,
Atlas anticipates that AGMI's claim against Atlas shall be satisfied in full
through the setoff of the inter-company receivables and therefore does not
anticipate that AGMI will share in the distribution of Atlas stock. For purposes
of this Disclosure, the stock shall be treated as if the Class 11 claim has been
fully satisfied by setoff. The treatment of the claims held by APMI against AGMI
are discussed under Class 50 of the AGMI Plan. The treatment of the claims held
by Atlas against APMI are discussed under Class 28 of the APMI Plan. In
addition, AGMI and APMI have outstanding administrative expense claims owing to
Atlas from the payment of post-petition obligations of AGMI and APMI. The
treatment of the administrative claims are addressed in Class 20 of the APMI
Plan and Class 40 of the AGMI Plan.
Class 12. Subordinated Debt Claims of the Shipes Parties. Class 12 is
comprised of the subordinated debt claims in the amount of $2,250,000 against
Atlas held by the Shipes Parties arising from the Settlement Agreement, approved
by the Bankruptcy Court resolving the litigation between Atlas, the Shipes
Parties and the Goldschmidts as discussed in the description of Litigation in
this Disclosure Statement The $580,000 claim allowed under the Settlement
Agreement shall be treated and paid as a Class 10 Claim. The remaining Class 12
Claim shall not share in any cash distribution until the Class 10 and 11 Allowed
Unsecured Claims have been paid in full. The subordinated Class 12 Debt Claim,
however, shall share in the distribution of the stock of the Reorganized Atlas
as set forth in paragraph 4.6(D) on a Pro Rata basis with the Class 10 Creditors
and to the extent that the claim exceed the setoff, the Class 11 Creditor.
The Class 12 subordinated debt claim will share on a pro rata basis with
the Class 10 unsecured claims estimated at $9,480,253.41 (if objections to
claims are sustained and $12,053,276.79 if they are not) and the Class 11
claim, to the extent that there is any allowed Class 11 claim after setoff as
discussed above. The exact percentage will be determined by the amount of the
Allowed Class 10 and 11 Claims. The percentage of stock anticipated to be
distributed to the Class 12 creditor is set forth in Exhibit M attached hereto.
Class 13. Claim of Gerald E. Davis. Class 13 is comprised of the claims
of Gerald E. Davis which arise under the terms of the Settlement Agreement dated
July 9, 1999 between the parties resolving the disputes and claims between
Gerald E. Davis and Atlas raised in the Chapter 11 proceeding and in Adversary
Case No. 99-1122 MSK captioned Atlas Corporation, Atlas Gold Mining Inc., and
Atlas Precious Metals, Inc. v. Gerald E. Davis. The Class 13 claim against
Atlas shall be treated as follows:
(A) Atlas shall pay Davis the sum of $5,000 upon the Effective Date.
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(B) Davis shall be paid the sum of $60,000 upon the sale of the Davis
Collateral at Gold Bar as a Class 43 claim under the AGMI Plan,
from the proceeds of any sale (if and when that sale occurs )
after satisfaction of the tax claims of Eureka County and any
administrative expenses. Davis shall be granted a security
interest by Atlas AGMI and APMI in the Davis Collateral at Gold
Bar assets described herein to the extent of $60,000. The
security interest granted to Davis shall be subordinate to the
tax claims of Eureka County and any administrative expenses.
(C) Davis shall be allowed an unsecured claim against Atlas which
shall be treated and paid as a Class 10 claim in the amount of
$120,246.
The Atlas Parties believe that the property which comprises the Davis
Collateral is an asset of the AGMI estate and that Atlas does not have an
interest in the collateral. However, under the terms of the Settlement
Agreement with Davis, Atlas has agreed to grant a security interest and deed of
trust conveying its interest in the Davis Collateral.
Class 14. Claims Held by the Internal Revenue Service, Colorado Department
of Revenue and Any Other Taxing Authority for Penalties Not Related to Actual
Pecuniary Loss. The Class 14 Claims are comprised of any penalty claims held
by the Internal Revenue Service, the Colorado Department of Revenue or any other
taxing authority which are not related to actual pecuniary loss. The allowed
Class 14 claims shall be treated and paid as Class 10 general unsecured claims
except the Class 14 claims shall not share in any distribution of stock of the
Reorganized Atlas.
The Internal Revenue Service has filed a proof of claim in the amount of
$61,138.43 for penalties for failure to fund the Atlas 1978 Defined Benefit
Pension Plan. As discussed under the Class 3 claims, Atlas believes that this
is a claim for a penalty not related to actual pecuniary loss and therefore
should be treated under Class 14 of the Plan.
Class 15. Common Stockholders Holding Less than 1,000 Shares. Class 15 is
comprised of the interests of common stockholders holding less than 1,000 shares
of Atlas stock on the Effective Date. The interests of all Class 15 interest
holders shall be voided unless the shareholder pays the cost of maintaining the
shares of $15 per year per shareholder. If the annual payment is made the
interest holder shall be treated in accordance with Class 16. Any Class 15
shareholding electing to maintain shares through payment of the $15 per year
shall serve notice upon the Debtor by filling out the appropriate election on
the ballot by the deadline set by the Court for submitting ballots on the Plan.
In the event that the Atlas Plan is confirmed by cramdown, without the
acceptance of each class of creditors, the interests of the Class 15 interest
holders shall be voided and the Class 15 interest holders shall not have the
option of retaining their shares by paying the maintenance fee.
By the Effective Date, Atlas shall serve notice upon those Class 15
Interest Holders who submitted written elections to pay the maintenance fees to
be treated on a pro rata basis with the Class 16 Interest Holders advising them
that the Plan has been confirmed by cramdown or with
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acceptance of each class. The notice to the Class 15 interest holders shall
advise them that their shares shall be voided if Atlas does not receive payment
of the stock maintenance fee within thirty days after the date of the notice and
on an annual basis thereafter.
Class 16. Common Stockholders Holding 1,000 Shares or More. Class 16 is
comprised of the common stockholders holding 1,000 shares or more of the common
stock of Atlas on the Effective Date. The Class 16 interest holders shall
retain their shares of common stock which shall be diluted such that the shares
which they collectively own shall constitute fifteen percent (15%) of the
outstanding stock of the Reorganized Atlas on the Effective Date. In the event
that the Plan is confirmed by cramdown, the interests of the Class 16
Stockholders shall be voided, and the stock interest shall be held by the
Reorganized Atlas as authorized but unissued shares.
By the Effective Date, Atlas shall serve notice upon the known Class 16
Interest Holders advising them that the Plan of Reorganization has been
confirmed and whether the Plan was confirmed by cramdown or with the acceptance
of each class.
Class 17. Warrants and Stock Options. Class 17 is comprised of any and
all outstanding warrants of Atlas Corporation and any and all outstanding stock
options. All such warrants and stock options shall be voided as of the
Effective Date.
Class 18. Late Filed Claims. Class 18 is comprised of all late filed
claims against Atlas. The Class 18 claims shall be disallowed and shall receive
no distribution under the Atlas Plan.
4. MEANS FOR THE IMPLEMENTATION AND EXECUTION OF THE ATLAS PLAN
On or about the Effective Date, all assets of Atlas shall be transferred to
the Reorganized Atlas free and clear of all liens, claims, and interests of
creditors, equity holders, and other parties in interest, except as otherwise
provided herein with respect to the assets to be transferred to the Reclamation
Trust in payment of the Class 4 Claims. Specifically, the assets shall be
transferred subject to the liens held by the Class 5, 6 and 13 secured creditors
and any Class 2 creditor with perfected liens. The Reorganized Atlas shall not,
except as otherwise provided in this Plan, be liable to repay any debts which
accrued prior to the Confirmation Date. Except as provided in this Atlas Plan,
on the Confirmation Date Atlas shall be granted a discharge under 11 U.S.C. (S)
1141.
On the Effective Date, Atlas shall begin implementing its Plan of
Reorganization pursuant to the terms for each class of claimants set forth
above. All payments under the Atlas Plan shall come from the cash held by the
Reorganized Atlas sixty days after the Effective Date less amounts withheld
pursuant to paragraph 4.6 of the Atlas Plan, from the sale of Cornerstone, the
Old Title X Receivables, of $552,000 paid prior to the Effective Date, and from
amounts collected post confirmation including 75% of the amounts received
directly or indirectly from AGMI and APMI from the sale of the Gold Bar and
Grassy Mountain properties and 10 percent of the CGL net recoveries (after costs
of collection) up to net recoveries of $1,500,000 and fifty percent of the net
recoveries thereafter. On the due date for payments, the Reorganized Atlas
shall distribute the
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required Pro Rata amount to each claimant holding an Allowed Secured or
Unsecured Claim and escrow the same Pro Rata amount to creditors holding
disputed claims as provided in Article X of the Plan.
By the Effective Date, Atlas shall serve notice upon the known Class 16
Interest Holders and those Class 15 Interest Holders electing to pay the annual
costs of maintaining the shares advising them that the Plan of Reorganization
has been confirmed and whether the Plan was confirmed by cramdown or with the
acceptance of each class. The notice to Class 15 Interest Holders shall advise
them that their shares shall be voided if Atlas does not receive payment of the
stock maintenance fee within thirty days after the date of the notice and on an
annual basis thereafter.
Distributions of the cash required under paragraph 4.6(A) of the Plan shall
be mailed by the 60th day after the Effective Date. Distributions of the funds
required under paragraphs 4.6(B) and 4.6(C) shall be mailed within fifteen days
after the close of the quarter in which the funds were received.
The Reorganized Atlas may pursue any claims or recovery actions held by
Atlas, including but not limited to recovery under 11 U.S.C. (S)(S)544, 547,
548 and 549 and recovery of any claims under insurance policies. The
Reorganized Atlas may abandon any claim Atlas has against any third party if it
determines that the claim is burdensome or of inconsequential value and benefit.
The Reorganized Atlas is authorized to employ counsel to represent Atlas in the
litigation or any cause of action or claims held by Atlas.
All funds held by the Reorganized Atlas for distribution under the Atlas
Plan shall be held in accounts which meet the insurance and guaranty
requirements 11 U.S.C. (S)345(b).
Following the Effective Date, the Reorganized Atlas may compromise
objections to Claims or causes of action referred to in this Atlas Plan without
notice and hearing for claims or causes of action asserted in the original
amount of $25,000 or less. Settlements or compromises of any claims or causes
of action asserted in the amount of $25,000 or more shall be subject to notice
and an opportunity for hearing under the provisions after notice in compliance
with the Local Rules of Bankruptcy Procedure.
After the Effective Date, the Reorganized Atlas exercising its business
judgment may sell, operate or abandon any of its assets. The Plan does not
provide that notice shall be given after the Effective Date of the abandonment
or sale of any of Atlas' assets due to the fact that sixty-five percent of the
stock of the Reorganized Atlas shall be distributed to the creditors who as
shareholders shall elect up to half of the Board of Directors and therefore the
creditors shall have input into the management of the Reorganized Atlas.
Atlas shall receive a discharge to the extent permitted by 11 U.S.C. (S)
1141 and Atlas shall be entitled to seek injunctive relief from the Court, if
necessary, to enforce any and all provisions of the Plan.
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If the Atlas Plan is confirmed with the acceptance of the classes, the
Class 16 Interest Holders and the Class 15 Interest Holders who have paid the
annual maintenance fee will retain their interests and new stock shall be issued
by the Reorganized Atlas to the Class 4, 5, 10, 11, and 12 creditors and
pursuant to the Management Compensation Plan within 90 days after the Effective
Date. In determining the Pro Rata share to be distributed to Contested Claims
under Article X, the shares shall be reserved as if the Contested Claims were
allowed in full and held by the Reorganized Atlas pending resolution of the
dispute. If Atlas' objections to the claims are sustained by Final Order, the
shares shall not be issued.
5. AMENDMENT OF ARTICLES OF INCORPORATION BYLAWS, STOCK INCENTIVE
PLAN, MANAGEMENT COMPENSATION PLAN AND BOARD OF DIRECTORS
Amendment of Articles of Incorporation and Bylaws
-------------------------------------------------
As may be required, the Articles and Bylaws of Atlas shall be amended on or
before the Effective Date to the extent necessary to effectuate the provisions
of the Atlas Plan, including but not limited to, reincorporating the Reorganized
Atlas under the laws of the State of Colorado, reverse splitting the common
stock such that for every thirty shares of outstanding common stock shall be
converted to one share of common stock in the Reorganized Atlas, maintaining its
authorized common stock at 100,000,000 shares and issuing new common stock in
compliance with the provisions of this Atlas Plan. In consummating the reverse
split of the common stock the following rules shall apply: (a) no fractional
shares shall be issued; (b) no compensation shall be paid for fractional shares;
and (c) to the extent an interest holder owns less than 30 shares on the
Effective Date, they shall receive, subject to compliance with Section 4.10 and
the treatment of Class 14, one share of the Reorganized Atlas. All percentages
of stock referred to in the Atlas Plan and this Disclosure Statement shall refer
to the percentage of issued and outstanding shares as of the Effective Date. In
addition, the certificate of incorporation shall be amended to include a
provision prohibiting the issuance of non-voting equity securities.
Stock Incentive Plan
--------------------
A Stock Incentive Plan shall be established pursuant to which the
employees, management or officers of Reorganized Atlas may acquire stock based
upon criteria established in the Stock Incentive Plan, to be approved by the
Board of Directors of the Reorganized Atlas. Any stock used for the Stock
Incentive Plan shall be derived from the unissued shares of the Reorganized
Atlas and not from any shares to be issued to any other party in interest.
Management Compensation Plan
----------------------------
A Management Compensation Plan shall be implemented on the Effective Date
to compensate current management and key employees for reorganizing Atlas and to
ensure stability and an orderly transition of management as may be required.
The Reorganized Atlas shall issue shares of stock in the Reorganized
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Atlas or options to purchase shares of stock in the Reorganized Atlas up to a
total of 12.5% of the total shares in the Reorganized Atlas (plus any additional
shares transferred from the Class 5(b) creditor) on the tenth business day of
the year 2000 as follows:
Gregg Shafter 2.5%
Richard E. Blubaugh 2.5% plus 1/2 of any shares from the Class 5(b)
claim
James Jensen 2.5% plus 1/4 of any shares from the Class 5(b) claim
Mario Caron 1.25%
Greg French 1.25% plus 1/4 of any shares from the Class 5(b) claim
Dale Edwards 1.00%
Janet Wilson 0.5%
Don Canepa 1.00%
The individual recipients listed above shall elect to receive the stock or
options by serving written notice upon the Debtor by the Effective Date of the
Plan. The option to purchase shall be exercisable over a period of five years
at an exercise price equal to $.01 over the market price on the date of issue.
The percentage of stock to be issued under the Management Incentive Program was
negotiated with the Creditors Committee. Continuity of management is believed
to be critical to Atlas' ability to reorganize and to recover value of its
assets including the CGL claims, its interests in Arisur and realization of
value from Grassy Mountain and Gold Bar. Management's employment contracts,
including their severance rights have been rejected. Management has foregone
salary increases for years, plans to take reductions and has already taken
significant reductions in salary to reduce administrative expenses to facilitate
the reorganization. It was deemed to be reasonable to provide an incentive to
management to facilitate the reorganization through the issuance of options to
purchase stock or a part of the stock. The 12 and 1/2 percent was negotiated
with the Committee and is believed to be a reasonable incentive under the
circumstances.
In addition, Richard E. Blubaugh shall receive a two year consulting
contract with a retainer of $30,000 per year payable in six equal monthly
installments due on the 15th day of the month after termination of his regular
employment. The payments to Richard Blubaugh under the consulting contract for
the second year shall be made only if he fulfills his consulting contract for
the first year. The consulting contract retainers shall be paid in lieu of the
salaried compensation which Mr. Blubaugh has received prior to confirmation.
Mr. Blubaugh shall perform services such that the number of hours of services
performed, billed at fees customarily charged by consultants with his
experience, shall equal at least the value of the retainer paid.
Board of Directors and Annual Shareholders Meeting.
--------------------------------------------------
The current Board of Directors shall serve until the next annual or special
meeting of shareholders, called in accordance with the Bylaws, provided that the
Official Creditors Committee shall on the Effective Date appoint new members to
the Board of Directors representing a minimum of two (2) new members up to a
maximum number of new members representing 50% of the Board. The Bylaws shall
be amended to provide that the Board of Directors shall consist of a minium of 4
and a maximum of 8 members. At the annual or special meeting, the shareholders
shall elect a new Board of Directors. Atlas is seeking to appoint two new Board
members, prior to the Effective Date,
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who have the approval of the Creditors Committee. This will require the
resignation of two Directors if and when two candidates are identified and
accept the appointment.
2. APMI PLAN OF REORGANIZATION
The APMI Plan has been provided to all creditors or possible creditors
known to APMI. The APMI Plan should be read carefully and independently of this
Disclosure Statement. The following analysis of the APMI Plan is intended to
provide a context for understanding the remainder of the Disclosure Statement.
Unless otherwise indicated, the claims of all creditors are impaired to some
extent. The following is a brief description of the treatment of each of the
classes of creditors and interest holders under the APMI Plan.
As described more fully herein, the Atlas Plan provides for the acquisition
of all assets of APMI by the Reorganized APMI, free and clear of all liens,
claims and interests of creditors, equity holders, and other parties in interest
except as otherwise provided in the Plan. The APMI Plan provides that the net
proceeds of sale, after payment of costs of sale, of the assets held by APMI
shall be distributed in accordance with the priorities set forth in the Plan to
the creditors of APMI. The APMI Plan further provides that the stock held by
Atlas shall be voided and new stock issued by the Reorganized APMI to the
unsecured creditors, including the claim of Atlas on a pro rata basis.
APMI estimates that at confirmation it will need approximately $207,075 (as
of August 31, 1999) to make the payments due to the Class 20 and 26 claimants on
the Effective Date as follows:
Class 20 $206,985
Class 26 $90
The Class 20 administrative expense claim is listed at the balance owing Atlas
for advances of administrative expenses as of August 31, 1999. Atlas has agreed
to receive payment when APMI has the funds to pay.
1. CLAIMS UNDER APMI PLAN
There are no Classes 1-19 under the APMI Plan as Classes 1-19 have been
reserved for the classes under the Atlas Plan. Classes 20-39 have been reserved
for classes under the APMI Plan. Classes 40 through 59 have been reserved for
classes under the AGMI Plan. The reserved classes have been implemented to
avoid confusion in the discussion of the treatment of the classes under the
Atlas, AGMI and APMI plans in the Disclosure Statement.
Class 20. Allowed Administrative Expense Claims as defined in 11 U.S.C.
(S) 503 of the Code against APMI. All fees payable to the U.S. Trustee shall be
paid in full as they become due.
Class 21. Any allowed unsecured and/or secured priority tax claims of any
taxing authority holding claims under 11 U.S.C. (S)507(a)(8) against APMI.
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Class 22. Unimpaired Claims of Holders of Unexpired Leases and Executory
Contracts against APMI.
Class 23. Unimpaired Secured Claims of Merrill Lynch.
Class 24. Unimpaired Secured Claims of the State of Oregon for Cleanup
obligations associated with the Grassy Mountain Mining Site.
Class 25 a. Impaired Secured Claims of ACSTAR.
Class 25 b. Impaired Unsecured and Administrative Claims of ACSTAR.
Class 26 Any unsecured creditors with allowed claims of less than $1,000
and any creditors holding claims in excess of $1,000 electing to accept $1,000
in full payment of their claims.
Class 27. Impaired Claims of General Unsecured Creditors of APMI.
Class 28. Impaired Claims held by Atlas.
Class 29. Impaired Claims of Gerald E. Davis.
Class 30. Impaired Claims held by any taxing authority for penalties not
related to actual pecuniary loss.
Class 31. Late filed claims.
Class 32. Impaired interests of common stockholders of APMI.
2. TREATMENT OF CLAIMS NOT IMPAIRED UNDER THE APMI PLAN
Class 20. Allowed Administrative Expenses pursuant to 11 U.S.C. (S)503.
Class 20 Allowed Administrative Expenses as defined by 11 U.S.C. (S)503 shall be
paid in cash in full on the Effective Date or shall by paid upon such other
terms as may be agreed upon by APMI and the respective holder of the claim for
Administrative Expenses. All fees payable to the U.S. Trustee program shall be
paid as they become due. Notwithstanding an assertion by the Class 24 and 25
claimants that their claims are entitled to priority under Section 503(b) of the
Bankruptcy Code, the Class 24 and 25 claims shall be treated under Class 24 and
25 respectively of this Plan and not as Class 20 Administrative Expenses. In
the event that APMI does not have sufficient cash to pay the administrative
claim in full on the Effective Date, the administrative expense claim will, with
the agreement of the Claimant, be paid from the proceeds of the sale of Grassy
Mountain or APMI's property at Gold Bar or at such date as APMI has sufficient
funds to pay the claim in full.
The claims of creditors for costs and expenses of administration of the
bankruptcy estate are defined in (S)503 of the Bankruptcy Code and include
professionals retained by the estate including
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Sender & Wasserman, P.C., counsel for the Debtor, Geographe which has been
retained to assist APMI in selling its interests in Grassy Mountain and/or Gold
Bar and any other professionals retained by Order of the Court.
<TABLE>
<CAPTION>
Fees and Costs Paid Accrued and Unpaid Fees
to Date as of 8/31/99 and Costs as of 8/31/99
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Sender & Wasserman $ 6,568.53 $2,509.73
- ----------------------------------------------------------------------------------------
Geographe $27,500.00 $ 750.000/3/
- ----------------------------------------------------------------------------------------
</TABLE>
APMI will have an outstanding unpaid administrative expense claim owing to
Atlas from advances for payment of its post-petition obligations. As of August
31, 1999 the administrative expense claim owing to Atlas is $206,985 which
includes funds advanced by Atlas to pay maintenance fees for claims covered by
the agreement with Vengold, Inc., which will be reimbursed to Atlas upon receipt
of the funds escrowed by Vengold pending approval of the Vengold Agreement. In
the event that APMI does not have sufficient cash to pay the administrative
claim in full on the Effective Date, the administrative expense claim will be
paid from the proceeds of the sale of Grassy Mountain or APMI's property at Gold
Bar or at such date as APMI has sufficient funds to pay the claim in full.
Atlas consents to the payment of the administrative expense claim under these
terms.
APMI does not believe that it will have any unpaid administrative claims
other than the claim owing to Atlas. APMI believes that the fees of Debtor's
counsel, and the other professionals retained in the case will have been paid
pursuant to Court's Order establishing the Interim Compensation Procedure
pursuant to which the claims 75% of the fees and 100% of the costs have been
paid on a monthly basis and the remaining 25% has been paid after approval of
Interim Fee Applications and will be reflected in the administrative claim owing
to Atlas. APMI believes that all professionals have or will have filed interim
fee applications seeking approval of the remaining 25% of the fees. To the
extent that there are professional fees which have not been applied for through
interim applications, these fees will be payable upon entry of an order
approving the application.
In addition to professional fees, Class 20 comprises any post-petition
administrative claims, including trade payables or breach of an assumed lease,
which are allowed as an administrative expense pursuant to Bankruptcy Court
order. APMI does not anticipate that there will be any allowed administrative
expense claims, other than the claim owing to Atlas, arising from post-petition
trade payables or breach of an assumed lease as APMI is and projects to remain
current in its post-petition payables.
__________________________
/3/ Contemplates that the fees paid to Geographe are allocated 50/50 between
AGMI and APMI based upon an allocation of 50% of the fee to Grassy Mountain held
by APMI and 50% of the fee to Gold Bar principally held by AGMI
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Further, Class 20 includes any post-petition claims for unpaid taxes,
including withholding. The Debtor does not anticipate that there will be any
administrative expense claims arising from unpaid tax obligations as the Debtor
is and projects to remain current in the payment of these obligations.
Class 20 includes fees owing to the United States Trustee pursuant to 28
U.S.C. (S)1903(a)(6), all of which have been paid currently during the pendency
of the case. Fees owing to the United States Trustee will be current up to the
date of confirmation and outstanding fees that are due will be paid on the
Effective Date. These fees will be included in the administrative claim owing
to Atlas.
To the extent there are allowed administrative claims of any other nature,
the amount outstanding shall be payable on the Effective Date as an unpaid
administrative expense.
Class 22. Executory Contracts and Unexpired Leases. Class 22 is comprised
of the claims held by parties to unexpired leases or executory contracts. APMI,
prior to the hearing on confirmation, shall file motions to assume or reject its
unexpired leases and executory contracts subject to the provisions of U.S.C.
(S)365 and notice under Fed. R. Bankr. P. 2002 and 6006. If APMI moves to
assume the unexpired leases and executory contracts, the claims shall be treated
in accordance with the order of the Court granting the assumption. Any
unexpired leases or executory contracts for which a Motion to Assume has not
been filed by APMI prior to the hearing on confirmation shall be deemed
rejected. Under the terms of the lease agreements, in the event that a lease is
rejected, the equipment or property will be returned to the lessor, unless APMI
and the lessor otherwise agree. Any Class 22 claimant asserting a claim for
damages arising from rejection of a lease shall file a proof of claim with the
Bankruptcy Court by the later of the Effective Date or thirty days after entry
of the Order granting the Motion to Reject or the claim shall be forever barred.
The claims held by holders of rejected leases or executory contracts shall be
treated as a Class 27 unsecured claim subject to the limitations of Section 502
of the Code.
As discussed at length in this Disclosure Statement in Section II F, APMI
is a party to a number of agreements pertaining to its mining leases, unpatented
lode and millsite claims, and mining permits related to Grassy Mountain and Gold
Bar. The law is unclear as to whether these mining agreements are
nonresidential real property leases governed by (S)365(d)(4), unexpired
executory contracts or as outright conveyances which are not executory
contracts. To avoid any question, APMI has requested, which the Bankruptcy Court
granted that the deadline to assume or reject leases governing these agreements
be extended through confirmation of its Plan of Reorganization. To avoid any
question, the Debtors will treat these agreements as if the provisions of
Section 365 apply and will seek to assume any agreements which they intend to
utilize post-confirmation.
Attached hereto as Exhibit F is a list of APMI's leases and executory
contracts including the Debtor's intentions regarding assumption or rejection.
APMI plans to assume the agreements related to Grassy Mountain and plans to
reject the agreements related to its interests in Gold Bar unless it appears
that an agreement for the purchase, joint venture or exploration of the property
can be reached in which case it will assume and assign those agreements.
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Class 23. Unimpaired Claims of Merrill Lynch. Class 23 is comprised of
the allowed secured claim of Merrill Lynch. The claim of Merrill Lynch arises
from a letter of credit in the amount of $5,425,000 pledged to secure Bond #6907
issued by ACSTAR, the Class 25 claimant to secure the cleanup obligations of
APMI at Grassy Mountain. The Class 23 claim is secured by a certificate of
deposit which is valued as of March 31, 1999 at $5,426,793. The letter of credit
has been called and the Class 23 claimant has retained the certificate of
deposit securing the claim. The Class 23 Claimant and the Debtor shall retain
all rights, without modification, under the related documents. The Class 23
Claimant is unimpaired and any allowed claim shall be paid by the Reorganized
APMI under the terms of the agreement.
Class 24. Unimpaired Secured Claims of the State of Oregon for Cleanup
obligations associated with the Grassy Mountain Property. Class 24 is comprised
of the Allowed secured claims of the State of Oregon for Cleanup obligations
associated with the Grassy Mountain property under permit numbers 23-1095 and
423-0224. The Class 24 claim is secured by Bond #6907 issued by ACSTAR, the
Class 25 claimant. The Class 24 claimant and the Debtor shall retain all
rights, without modification, under Permit Numbers 23-1095 and 423-0224 and Bond
#6907. The Class 24 Claimant is unimpaired. The Class 24 claim has been
scheduled as contingent and unliquidated in the amount of $146,200. The Debtor
believes that the value of the bonds securing the obligations exceed the value
of the claim, if any. The Debtor projects that the claim for cleanup
obligations associated with the Grassy Mountain Property will be approximately
$100,000.
3. TREATMENT OF CLAIMS IMPAIRED UNDER THE APMI PLAN
Class 21. Allowed Secured and Unsecured Tax Claims pursuant to 11 U.S.C.
(S) 507(a)(8). Class 21 is comprised of Allowed Unsecured Tax Claims under
U.S.C. (S)507(a)(8) excluding claims for penalties not related to actual
pecuniary loss. The Class 21 claimants shall receive 100% of their secured and
unsecured priority claims in quarterly installments with interest at 8% per
annum. The Class 21 claims shall be paid in full within six years from the date
of assessment. Claims for penalties not related to actual pecuniary loss shall
be treated under Class 30. Payments to the Class 21 claimants shall commence
within fifteen days after the close of the first calendar quarter ending after
the Effective Date of the APMI Plan. The Class 21 claimants shall retain their
prepetition liens, if any, on property of the Reorganized APMI pending payment
in full of the Class 21 claims. The allowed amount of any Class 21 claim shall
be subject to determination under Section 505 of the Bankruptcy Code. The
Debtor shall file any requests for determination under Section 505 within sixty
days of the Effective Date of the Plan. Any disputed portion of a Class 21
Claim shall be treated as a Contested Claim in accordance with the provisions of
Article X of this Plan
APMI does not believe that there are any Class 21 secured claims. It has
not scheduled any tax claims outstanding. As of the date of the filing of this
Disclosure Statement, no tax claims have been filed against APMI.
Class 25a. Allowed Secured Claims of ACSTAR The Class 25a claims are
comprised of the Allowed Secured Claims of ACSTAR which were secured by certain
letters of credit in the
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aggregate amount of $5,425,000 plus the Escrow Fund The ACSTAR Allowed Secured
Claims are based upon the ACSTAR Bonds and ACSTAR Moab Bond in the aggregate
amount of $8,290,000 to secure Moab Cleanup Obligations and Other Cleanup
Obligations including the cleanup obligations owing to the Class 25 claimant
under the APMI Plan. ACSTAR's secured claims against Atlas, AGMI and APMI are
cross collateralized. ACSTAR has drawn on the letters of credit and is entitled
to use the proceeds from the letters of credit in order to pay the Class 4
creditors under the Atlas Plan and to reimburse itself for the actual amount
incurred under the ACSTAR Bonds for Other Cleanup Obligations including the
cleanup obligations owing to the Class 25 claimant under the APMI Plan, and its
unpaid fees and expenses. Furthermore, any amount remaining from the Escrow fund
may be used by ACSTAR for the same purposes. To the extent any funds remain in
the Escrow Fund after satisfaction of the Other Cleanup Obligations secured by
the ACSTAR Bonds and any unpaid fees and expenses ACSTAR has incurred on said
Bonds, such funds shall be remitted to the Reorganized Atlas. ACSTAR shall
retain its rights under the escrow agreement. The foregoing treatment shall
constitute satisfaction in full of the Class 25a Allowed Secured Claim.
Class 25b. Impaired Unsecured and Administrative Claims of ACSTAR The
Class 25(b) claim is comprised of the unsecured deficiency claim which ACSTAR
has for the Other Cleanup Obligations which it has to pay, and unpaid fees and
expenses in excess of its Class 25(a) Allowed Secured Claim, which claim shall
not exceed $500,000. Any claim by ACSTAR that its claims are entitled to
treatment as a Class 20 Administrative Expense, under any theory, and any
potential claim against ARISUR, shall be waived and released. For purposes of
voting and feasibility the Class 25(b) claim shall be estimated at $500,000.
ACSTAR's unsecured claims against Atlas, AGMI and APMI shall collectively not
exceed $500,000. The claims shall be allocated among the estates based upon
actual damage, with the claim applied first to AGMI, then to APMI and then to
Atlas. The actual amount of the Class 25(b) monetary claim allowed against APMI
shall be paid as a Class 27 Allowed Unsecured Claim. On the later of Effective
Date of the APMI Plan or at such time as the Class 25(b) creditors claim is
actually determined, it shall receive in full satisfaction of its claim a
monetary claims equal to the actual amount expended for Other Cleanup
Obligations, plus fees and expenses, not to exceed $500,000, which shall be
treated as a Class 27 unsecured claim and shall receive shares representing its
pro rata share (determined with respect to Class 27 and 28 claimants) of the
outstanding common stock of the Reorganized APMI; provided that distributions
to the Class 25(b) creditor shall be held by a mutually acceptable escrow agent
pending determination of ACSTAR's responsibility for the Other Cleanup
Obligations . If Bonds #5659, #5660 and #5661 for the Gold Bar property are
terminated without being called and/or there is no unsecured deficiency, the
Allowed Class 25(b) claim shall be $0 and the shares which are being held in
escrow shall remain treasury stock.
Class 26. Administrative Convenience Class. Class 26 is comprised of the
claims of unsecured creditors with allowed claims of $1,000 or less and
unsecured creditors holding claims in excess of $1,000 electing to accept $1,000
in full payment of their claims. The Class 26 claims shall be paid in full
without interest on the Effective Date. Creditors wishing to elect to have
their claim treated under Class 26 shall make an election in writing to be
received by undersigned counsel for the Debtor on or before the due date for
tendering ballots to this Plan. APMI believes that there are two claims which
fall within Class 26 totaling $90.
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Class 27. Allowed Unsecured Claims. Class 27 is comprised of the Allowed
Unsecured Claims against APMI. The Allowed Class 27 creditors shall receive:
(A) Their pro rata share of the proceeds of from the sale or joint
venture of APMI's interests in the Gold Bar and/or Grassy Mountain
properties after payment of costs of sale and after satisfaction of the
Allowed Class 20 and 21 Claims. The funds shall be distributed on a Pro
Rata basis between the Allowed Claims of the Class 27 and 28 creditors who
for shall be treated as one class.
(B) Their pro rata share of the common stock to be issued by the
Reorganized APMI. The stock shall be distributed on a Pro Rata basis
between the Allowed Claims of the Class 27 and 28 creditors. For purposes
of this distribution, the Class 27 and 28 Creditors shall be treated as one
class.
(C) The Class 27 and 28 claims shall bear interest at the rate of 8
percent per annum from the Effective Date. Interest shall be payable only
if the proceeds of the sale as provided in (A) above are sufficient to pay
the Allowed Class 27 and 28 claims in full.
For purposes of this distribution, the Class 27 and 28 Creditors shall be
treated as one class. Any Allowed claim of ACSTAR under Class 25(b) shall be
treated as a Class 27 claim. APMI believes that the Class 27 claims, without
including the claim of Atlas, treated in Class 28 and the unsecured claims of
ACSTAR, if any treated in Class 25(b), total $524,062. Exhibit J is a list of
the claims the Debtor believes comprise the Class 27 claims, including a
statement of those claims which are disputed.
Class 28. Claims Held by Atlas. Class 28 is comprised of the claims held
by Atlas other than its claims as an interest holder treated under Class 30.
Class 28 claims arise from an inter-company payable for cash advanced to APMI.
The allowed claim of AGMI under the Atlas Plan shall first be offset against
AGMI's obligations to APMI which will reduce the accounts receivable owed by
APMI to Atlas. The net Allowed Class 28 Claim shall be treated on a Pro Rata
basis with the Class 27 creditors and shall receive its pro rata share of the
distributions of proceeds of sale of APMI's interest in the Gold Bar and Grassy
Mountain properties and stock issued by the Reorganized APMI.
The prepetition intercompany receivables are calculated as of January 26,
1999, the date of the bankruptcy filings by APMI and AGMI. Atlas Corporation is
a creditor of APMI holding a prepetition unsecured claim of $26,753,941. APMI
is a creditor of AGMI holding a prepetition unsecured claim of $11,867,299.
AGMI is a creditor of Atlas holding a prepetition unsecured claim of $4,488,260.
After setoff, the claim held by APMI against AGMI shall be reduced to $7,679,039
and the claim held by Atlas against APMI shall be reduced to $22,565,688. The
treatment of the claims held by APMI against AGMI are discussed under Class 50
of the AGMI Plan. In addition, AGMI and APMI have outstanding administrative
expense claims owing to Atlas from the payment of post-petition obligations of
AGMI and APMI. The treatment of the administrative claims are addressed in
Class 20 of the APMI Plan and Class 40 of the AGMI Plan.
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Class 29 Claims Held by Gerald E. Davis Class 29 is comprised of the
claims of Gerald E. Davis which arise under the terms of the Settlement
Agreement dated July 9, 1999 between the parties resolving the disputes and
claims between Gerald E. Davis and Atlas, AGMI and APMI raised in the Chapter 11
proceeding and in Adversary Case No. 99-1122 MSK captioned Atlas Corporation,
Atlas Gold Mining Inc., and Atlas Precious Metals, Inc. v. Gerald E. Davis. The
claims of Gerald E. Davis shall also be treated as a Class 13 claim under the
Atlas Plan and a Class 43 claim under the AGMI Plan. Davis shall be granted a
security interest by Atlas AGMI and APMI in the Davis Collateral at Gold Bar
described herein to the extent of $60,000. The security interest granted to
Davis shall be subordinate to the tax claims of Eureka County and any
administrative expenses. The Atlas Parties believe that the property which
comprises the Davis Collateral is an asset of the AGMI estate and that APMI does
not have an interest in the collateral. However, under the terms of the
Settlement Agreement with Davis, APMI has agreed to grant a security interest
and deed of trust conveying its interest in the Davis Collateral.
Class 30. Claims Held by Any Taxing Authority for Penalties Not Related to
Actual Pecuniary Loss. The Class 30 Claims are comprised of any penalty claims
held by any taxing authority which are not related to actual pecuniary loss.
The allowed Class 30 claims shall be treated and paid as Class 27 general
unsecured claims except the Class 30 claims shall not share in any distribution
of stock of the Reorganized Atlas. APMI does not believe that there are any
Class 30 claims.
Class 31. Late Filed Claims. Class 31 is comprised of all late filed
claims against APMI. The Class 31 claims shall be disallowed and shall receive
no distribution under the APMI Plan unless and until the Class 27 and 28 claims
have been paid in full with interest at 8 percent per annum.
Class 32. Interests of Atlas Corporation. Class 32 is comprised of the
interests of Atlas Corporation which holds one-hundred percent of the stock of
APMI. The interests of the Class 30 interest holder shall be voided. The Class
32 Interest Holder shall receive no distributions on account of its interests
unless and until the Class 27, 28 and allowed Class 31 claims have been paid in
full with interest at 8% per annum.
4. MEANS FOR THE IMPLEMENTATION AND EXECUTION OF THE APMI PLAN
On or about the Effective Date, all assets of APMI shall be transferred to
the Reorganized APMI free and clear of all liens, claims, and interests of
creditors, equity holders, and other parties in interest, except as otherwise
provided herein. Specifically, the assets shall be transferred subject to the
liens held by the Class 25(a) and 29 secured creditors and any Class 21 creditor
with perfected liens. The Class 23 and 24 creditors shall be entitled to retain
the collateral securing their claims. The Reorganized APMI shall not, except as
otherwise provided in this Plan, be liable to repay any debts which accrued
prior to the Confirmation Date. Except as provided in this APMI Plan, on the
Confirmation Date APMI shall be granted a discharge under 11 U.S.C. (S) 1141.
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On the Effective Date, APMI shall begin implementing its Plan of
Reorganization pursuant to the terms for each class of claimants set forth
above. All payments under the APMI Plan shall come from the cash held by the
Reorganized APMI or proceeds of the sale of its interests in the Gold Bar and
Grassy Mountain properties after costs of sale. The Class 20 administrative
expenses may be paid from advances by the Reorganized Atlas.
The Reorganized APMI shall distribute the proceeds of the sale of its
interests in the Gold Bar and Grassy Mountain properties, after payment of costs
of sale, in order of priority as established in the APMI Plan within fifteen
days after the close of the calendar quarter in which the proceeds were
received.
If the Allowed Secured Claims secured by APMI's interests in the Gold Bar
and/or Grassy Mountain properties have not been satisfied through the sale,
joint venture, exploration agreement or other agreement with respect to the
properties, by the five year anniversary of the Effective Date, the injunction
precluding action against APMI and its assets shall be lifted as of the first
business day after the five year anniversary of the Effective Date and the
holders of Allowed Secured Claims shall be entitled to pursue their state court
remedies against the collateral securing their claims.
The stock to be issued by the Reorganized APMI to the Allowed Claims of the
Class25(b), 27 and 28 creditors shall be issued within 90 days after the
Effective Date. In determining the Pro Rata share to be distributed to
Contested Claims under Article X of the APMI Plan, the shares shall be reserved
as if the Contested Claims were allowed in full and held by the Reorganized APMI
pending resolution of the dispute. If APMI' objections to the claims are
sustained by Final Order, the shares shall not be issued.
The Reorganized APMI may pursue any claims or recovery actions held by
APMI, including but not limited to recovery under 11 U.S.C. (S)(S)544, 547, 548
and 549. The Reorganized APMI may abandon any claim APMI has against any third
party if it determines that the claim is burdensome or of inconsequential value
and benefit. The Reorganized APMI is authorized to employ counsel to represent
APMI in the litigation or any cause of action or claims held by APMI.
All funds held by the Reorganized APMI for distribution under the APMI Plan
shall be held in accounts which meet the insurance and guaranty requirements 11
U.S.C. (S)345(b).
Following the Effective Date, the Reorganized APMI may compromise
objections to Claims or causes of action referred to in this APMI Plan without
notice and hearing for claims or causes of action asserted in the original
amount of $5,000 or less. Settlements or compromises of any claims or causes of
action asserted in the amount of $5,000 or more shall be subject to notice and
an opportunity for hearing under the provisions after notice in compliance with
the Local Rules of Bankruptcy Procedure.
After the Effective Date, the Reorganized APMI exercising its business
judgment may sell, operate or abandon any of its assets. The Plan does not
provide that notice shall be given after the Effective Date of the abandonment
or sale of any of APMI's assets due to the fact that the stock of the
Reorganized APMI shall be distributed to the creditors who as shareholders shall
elect the Board
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of Directors and therefore the creditors shall have input into the management of
the Reorganized APMI.
APMI shall receive a discharge only to the extent permitted by 11 U.S.C.
(S) 1141 and APMI shall be entitled to seek injunctive relief from the Court, if
necessary, to enforce any and all provisions of the Plan. Under the provisions
of 11 U.S.C. (S)1141(d)(3), APMI may not be entitled to a discharge since it is
not currently operating the properties and is planning to liquidate
substantially all of its assets. However, the confirmation of the Plan shall
result in the imposition of an injunction precluding creditors from taking
action against the assets of APMI except as provided in the Plan.
5. AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS OF APMI
As may be required, the Articles and Bylaws of APMI shall be amended on or
before the Effective Date to the extent necessary to effectuate the provisions
of the APMI Plan, including but not limited to, reincorporating the Reorganized
APMI under the laws of the State of Colorado, voiding its existing common stock
and issuing new common stock in compliance with the provisions of the APMI Plan.
No fractional shares of stock shall be issued.
Board of Directors and Annual Shareholders Meeting.
---------------------------------------------------
The current Board of Directors shall serve until the next annual or special
meeting of shareholders, called in accordance with the Bylaws. At the annual or
special meeting, the shareholders shall elect a new Board of Directors.
C. AGMI PLAN OF REORGANIZATION
The AGMI Plan has been provided to all creditors or possible creditors
known to AGMI. The AGMI Plan should be read carefully and independently of this
Disclosure Statement. The following analysis of the AGMI Plan is intended to
provide a context for understanding the remainder of the Disclosure Statement.
Unless otherwise indicated, the claims of all creditors are impaired to some
extent. The following is a brief description of the treatment of each of the
classes of creditors and interest holders under the AGMI Plan.
As described more fully herein, the Atlas Plan provides for the acquisition
of all assets of AGMI by the Reorganized AGMI, free and clear of all liens,
claims and interests of creditors, equity holders, and other parties in interest
except as otherwise provided in the Plan. The AGMI Plan provides that the net
proceeds of sale, after payment of costs of sale, of the assets held by AGMI
shall be distributed in accordance with the priorities set forth in the Plan to
the creditors of AGMI. AGMI shall collect any royalty interests payable on
account of the claims it held covered by the Vengold Agreement and shall also
seek to recover funds from the dismantling of the mill and equipment owned by
AGMI at Gold Bar. The AGMI Plan provides that the stock held by Atlas shall be
voided and new stock issued by the Reorganized AGMI to the unsecured creditors,
including the claim of APMI on a pro rata basis.
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AGMI estimates that at confirmation it will need approximately $149,561.90
(as of August 31, 1999) to make the payments due to the Class 40 and 48
claimants on the Effective Date as follows:
Class 40 $146,923.00
Class 48 $2,638.90
The Class 40 administrative expense claim is listed as the balance owing Atlas
as of August 31, 1999. Atlas has agreed to receive payment when AGMI has the
funds to pay.
1. CLAIMS UNDER AGMI PLAN
There are no Classes 1-39 under the AGMI Plan as Classes 1-19 have been
reserved for the classes under the Atlas Plan. Classes 20-39 have been reserved
for classes under the APMI Plan. Classes 40 through 59 have been reserved for
classes under the AGMI Plan.
Class 40. Allowed Administrative Expense Claims as defined in 11 U.S.C.
(S) 503 of the Code against AGMI. All fees payable to the U.S. Trustee shall be
paid in full as they become due.
Class 41. Any allowed unsecured and/or secured priority tax claims of any
taxing authority, including the claims asserted by Eureka County Nevada, holding
claims under 11 U.S.C. (S)507(a)(8) against AGMI.
Class 42. Unimpaired Claims of Holders of Unexpired Leases and Executory
Contracts against AGMI.
Class 43 Impaired Secured Claims of Gerald E. Davis.
Class 44 Unimpaired Secured Claims of Bureau of Land Management for
Cleanup obligations associated with the Gold Bar Property.
Class 45a. Impaired Secured Claims of ACSTAR.
Class 45b. Impaired Unsecured and Administrative Claims of ACSTAR.
Class 46 Unimpaired Secured Claims of Norwest Bank.
Class 47 Impaired Secured Claims of United States Fire Insurance
Company.
Class 48. Any unsecured creditors with allowed claims of less than $1,000
and any creditors holding claims in excess of $1,000 electing to accept $1,000
in full payment of their claims.
Class 49. Impaired Claims of General Unsecured Creditors of AGMI.
Class 50 Impaired Claims held by APMI.
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Class 51. Impaired Claims held by any taxing authority for penalties not
---------
related to actual pecuniary loss.
Class 52. Late filed claims.
---------
Class 53. Impaired interests of common stockholders of AGMI.
---------
2. TREATMENT OF CLAIMS NOT IMPAIRED UNDER THE AGMI PLAN
Class 40. Allowed Administrative Expenses pursuant to 11 U.S.C. (S)503.
--------- --------------------------------------------------------------
Class 40 Allowed Administrative Expenses as defined by 11 U.S.C. (S)503 shall be
paid in cash in full on the Effective Date or shall by paid upon such other
terms as may be agreed upon by AGMI and the respective holder of the claim for
Administrative Expenses. All fees payable to the U.S. Trustee program shall be
paid as they become due. Notwithstanding an assertion by the Class 44 and 45
claimants that their claims are entitled to priority under Section 503(b) of the
Bankruptcy Code, the Class 44 and 45 claims shall be treated under Class 44 and
45 respectively of this Plan and not as Class 40 Administrative Expenses. In
the event that AGMI does not have sufficient cash to pay the administrative
claims in full on the Effective Date, the administrative expense claims will,
with the agreement of the Claimant, be paid from the proceeds of the sale of the
property at Gold Bar or at such date as AGMI has sufficient funds to pay the
claim in full.
AGMI will have an outstanding unpaid administrative expense claim to Atlas
from advances for payment of its post-petition obligations. As of August 31,
1999 the administrative expense claim owing to Atlas is $146,923.00, which
includes funds advanced by Atlas to pay maintenance fees for claims covered by
the agreement with Vengold, Inc., which will be reimbursed to Atlas upon receipt
of the funds escrowed by Vengold pending approval of the Vengold Agreement. In
the event that AGMI does not have sufficient cash to pay the administrative
claim in full on the Effective Date, the administrative expense claim will be
paid from the proceeds of the sale of AGMI's property at Gold Bar or at such
date as AGMI has sufficient funds to pay the claim in full. Atlas consents to
the payment of the administrative expense claim under these terms.
The claims of creditors for costs and expenses of administration of the
bankruptcy estate are defined in (S)503 of the Bankruptcy Code and include
professionals retained by the estate including Sender & Wasserman, P.C., counsel
for the Debtor, Geographe which has been retained to assist AGMI in selling its
interests in Gold Bar and any other professionals retained by Order of the
Court.
- -------------------------------------------------------------------------------
Fees and Costs Paid Accrued and Unpaid Fees
to 8/31/99 and Costs as of 8/31/99
- -------------------------------------------------------------------------------
Sender & Wasserman $10,347.78 $3,217.23
- -------------------------------------------------------------------------------
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Accrued and Unpaid
Fees and Costs Paid Fees and Costs as of
to 8/31/99 8/31/199
- --------------------------------------------------------------------------------
Geographe 27,500.00 $ 750.00/4/
- --------------------------------------------------------------------------------
AGMI does not anticipate that there will be any outstanding unpaid
administrative expenses upon confirmation of the Plan, other than the claims of
Atlas. AGMI believes that the fees of Debtor's counsel, and the other
professionals retained in the case will have been paid pursuant to Court's Order
establishing the Interim Compensation Procedure pursuant to which the claims 75%
of the fees and 100% of the costs have been paid on a monthly basis and the
remaining 25% has been paid after approval of Interim Fee Applications and will
be reflected in the administrative claim held by Atlas. AGMI believes that all
professionals have or will have filed interim fee applications seeking approval
of the remaining 25% of the fees. To the extent that there are professional
fees which have not been applied for through interim applications, these fees
will be payable upon entry of an order approving the application.
In addition to professional fees, Class 40 comprises any post-petition
administrative claims, including trade payables or breach of an assumed lease,
which are allowed as an administrative expense pursuant to Bankruptcy Court
order. AGMI does not anticipate that there will be any allowed administrative
expense claims arising from post-petition trade payables or breach of an assumed
lease, other than the claim of Atlas, as AGMI is and projects to remain current
in its post-petition payables.
Further, Class 40 includes any post-petition claims for unpaid taxes,
including withholding and anypost-petition property taxes which have accrued to
Eureka County, Nevada. Without the Agreement of the County of Eureka these
claims must be paid in cash on the Effective Date. AGMI maintains that there
are no post-petition taxes owing as they are entitled to a credit from
overpayment of taxes pre-petition. Eureka County has disputed the AGMI's
position and asserts that AGMI is not entitled to a credit under applicable law
because the 1996-1997 tax year has closed. The availability of any credit and
the amount of any tax will be determined by the Court in the proceedings under
Section 505 of the Bankruptcy Code. The Debtor does not anticipate that there
will be any administrative expense claims arising from unpaid tax obligations
other than Eureka County to the extent of any allowed claim. In the event that
the Court determines that there are post-petition taxes owing, they shall be
paid from cash held by AGMI or from advances from Atlas.on the later of the
Effective Date or entry of an Order resolving the disputes under Section 505 of
the Bankruptcy Code as to the valuation of the property subject to the tax.
Class 40 includes fees owing to the United States Trustee pursuant to 28
U.S.C. (S)1903(a)(6), all of which have been paid currently during the pendency
of the case. Fees owing to the United
- ---------------------
/4/ Contemplates that the fees paid to Geographe are allocated 50/50 between
AGMI and APMI based upon an allocation of 50% of the fee to Grassy Mountain held
by APMI and 50% of the fee to Gold Bar principally held by AGMI
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States Trustee will be current up to the date of confirmation and outstanding
fees that are due will be paid on the Effective Date. These fees will be
included in the administrative claim owing to Atlas.
To the extent there are allowed administrative claims of any other nature,
the amount outstanding shall be payable on the Effective Date as an unpaid
administrative expense.
Class 42. Executory Contracts and Unexpired Leases. Class 42 is
--------- ------------------------------------------
comprised of the claims held by parties to unexpired leases or executory
contracts. AGMI, prior to the hearing on confirmation, shall file motions to
assume or reject its unexpired leases and executory contracts subject to the
provisions of 11 U.S.C. (S)365 and notice under Fed. R. Bankr. P. 2002 and 6006.
If AGMI moves to assume the unexpired leases and executory contracts, the claims
shall be treated in accordance with the order of the Court granting the
assumption. Any unexpired leases or executory contracts for which a Motion to
Assume has not been filed by AGMI prior to the hearing on confirmation shall be
deemed rejected. Under the terms of the lease agreements, in the event that a
lease is rejected, the equipment or property will be returned to the lessor,
unless AGMI and the lessor otherwise agree. Any Class 42 claimant asserting a
claim for damages arising from rejection of a lease shall file a proof of claim
with the Bankruptcy Court by the later of the Effective Date or thirty days
after entry of the Order granting the Motion to Reject or the claim shall be
forever barred. The claims held by holders of rejected leases or executory
contracts shall be treated as a Class 49 unsecured claim subject to the
limitations of Section 502 of the Code.
As discussed at length in this Disclosure Statement in Section II F, AGMI
is a party to a number of agreements pertaining to its mining leases, unpatented
lode and millsite claims, and mining permits related to Gold Bar. The law is
unclear as to whether these mining agreements are nonresidential real property
leases governed by (S)365(d)(4), unexpired executory contracts or as outright
conveyances which are not executory contracts. To avoid any question, AGMI has
requested, which the Bankruptcy Court granted that the deadline to assume or
reject leases governing these agreements be extended through confirmation of its
Plan of Reorganization. To avoid any question, the Debtors will treat these
agreements as if the provisions of Section 365 apply and will seek to assume any
agreements which they intend to utilize post-confirmation.
Attached hereto as Exhibit G is a list of AGMI's leases and executory
contracts including the Debtor's intentions regarding assumption or rejection.
AGMI plans to reject the lease agreements related to its interests in Gold Bar
unless it appears that an agreement for the purchase, joint venture or
exploration of the property can be reached in which case it will assume and
assign those agreements.
Class 44. Unimpaired Secured Claims of Bureau of Land Management for
--------- ----------------------------------------------------------
Cleanup obligations associated with the Gold Bar Property. Class 44 is
- ----------------------------------------------------------
comprised of the Allowed secured claims of the Bureau of Land Management for
Cleanup obligations associated with the Gold Bar Property under Plan numbers
N64, 92-003P, N64, 89-004P and 87-008P. The Class 44 claim is secured by Bond
#5661 issued by ACSTAR, the Class 45 claimant and United States Fire Insurance
Company Bond Numbers 6101757263 and 6101757189. The Class 44 claimant and the
Debtor shall retain all rights, without modification, under Plan numbers N64,
92-003P; N64, 89-004P and 87-
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008P and Bond #5661 issued by ACSTAR, and United States Fire Insurance Company
Bond Numbers 6101757263 and 6101757189. AGMI believes that the bonds will be
sufficient to satisfy the Class 44 claim in full. To the extent that the bonds
are sufficient to pay the allowed claims of the Class 44 Claimant in full, the
Class 44 Claimant is unimpaired. To the extent that the bonds are insufficient
to pay the allowed claims of the Class 44 Claimant in full, the deficiency
claims shall be treated as a Class 49 unsecured claim. AGMI has scheduled the
claims of the Class 44 Claimant as contingent and unliquidated. The value of the
bonds securing the claims against AGMI total $2,911,000.
Class 46. Unimpaired Secured Claims of Norwest Bank. Class 46 is comprised
--------- ------------------------------------------
of Allowed Secured Claims of Norwest Bank of Colorado which has issued a letter
of credit in the amount of $750,000 secured by a Certificate of Deposit for the
benefit of United Fire Insurance Company. The value of the Certificate of
Deposit securing the claims of the Class 46 creditor is $750,000. The letter of
credit has been called and the Class 46 creditor has applied the Certificate of
Deposit to the outstanding balance. AGMI believes that the rights and
obligations of the Class 46 creditor have been satisfied in full. The Class 46
Claimant and the Debtor shall retain all rights, without modification, under the
related documents. The Class 46 Claimant are unimpaired and any allowed claim
shall be paid out of the collateral held by the Class 46 claimants under the
terms of the agreements. The value of the collateral securing the Class 46
claim is $750,000.
3. TREATMENT OF CLAIMS IMPAIRED UNDER THE AGMI PLAN
Class 41. Allowed Secured and Unsecured Tax Claims pursuant to 11 U.S.C.
-------- --------------------------------------------------------------
(S) 507(a)(8).Class 41 is comprised of Allowed Secured and Unsecured Tax Claims
- --------------
under U.S.C. (S)507(a)(8) excluding claims for penalties not related to actual
pecuniary loss.
Secured Tax Claims The Class 41 claimants shall retain their prepetition
------------------
liens, if any, on property of the Reorganized AGMI pending payment in full of
the Class 41 secured claims. The Class 41 claimants with secured claims shall
be paid from the proceeds of the sale, joint venture or other agreement related
to the collateral subject to the liens held by the Class 41 creditors the
assets secured by the liens within six years after the date of assessment or the
Class 41 claimants shall be released from the injunction entered upon
Confirmation and shall have the right to pursue its rights and remedies arising
from its prepetition liens under state law.
Unsecured Tax Claims The Class 41 claimants shall receive 100% of their
--------------------
unsecured priority claims with interest at 8% per annum. The Class 41 unsecured
claims shall be paid in full through annual installments within six years from
the date of assessment. Payments to the Class 41 claimants on account of
unsecured claims shall commence within fifteen days after the close of the first
annual anniversary of the Effective Date of the AGMI Plan.
Claims for penalties not related to actual pecuniary loss shall be treated
under Class 51. The allowed amount of any Class 41 claim shall be subject to
determination under Section 505 of the Bankruptcy Code. The Debtor shall file
any requests for determination under Section 505 within sixty days of the
Effective Date of the Plan. Any disputed portion of a Class 41 Claim shall be
treated as a Contested Claim in accordance with the provisions of Article X of
this Plan.
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The Class 41 claims include the claim asserted by Eureka County Nevada for
unpaid property taxes for tax years 1997 and 1998 which are treated as a secured
Class 41 tax claim to the extent of the value of their lien. Eureka County
asserts a first priority tax lien in AGMI's interest in Gold Bar including the
equipment and the mill. The Class 41 creditor has asserted a claim in the total
amount of $236,697.62, comprised of unpaid taxes of $209,071.23 and penalties
and interest totaling $27,608.39. The Debtor does not dispute that there are
taxes owing but asserts that the taxes were assessed against improper values,
and therefore there is a dispute as to the amount owing. The taxes were based
upon an assessed asset value of approximately $17,000,000 when the values were
substantially less. The Debtor has scheduled the claim at $198,256.58 and
believes that the claim may in fact be less. Based upon an analysis of
appraised values, it appear that in fact AGMI has a credit for overpayment of
taxes for the year 1996-1997 which offsets any tax obligation owing for
subsequent years. The Debtor therefore believes that the outstanding tax claim
is $0. AGMI has filed an objection to the claim filed by Eureka County seeking
a determination of the value under Section 505 and the availability of any
credit under the provisions of Section 505. Eureka County has filed an
objection to the Motion.
The payments to the Class 41 creditor shall be paid from the proceeds
received by AGMI from the liquidation of the equipment or from the dismantling
of the mill held by AGMI. In the event AGMI fails to make the payments of the
Allowed Class 41 tax claim, Eureka County may proceed to foreclose on its tax
liens.
Class 43 Claims of Gerald E. Davis. Class 43 is comprised of the claims of
-------- -------------------------
Davis which arise under the terms of the Settlement Agreement dated July 9, 1999
between the parties resolving the disputes and claims between Davis and Atlas
raised in the Chapter 11 proceeding and in Adversary Case No. 99-1122 MSK
captioned Atlas Corporation, Atlas Gold Mining Inc., and Atlas Precious Metals,
Inc. v. Gerald E. Davis. The claims of Davis shall also be treated as a Class
13 claim under the Atlas Plan and a Class 29 claim under the APMI Plan. Davis
shall be granted a security interest by Atlas AGMI and APMI in the Davis
Collateral at Gold Bar described herein to the extent of $60,000. The security
interest granted to Davis shall be subordinate to the Class 41 tax claims of
Eureka County and any administrative expenses. If the collateral securing the
claims of the Class 43 creditor has not been sold within five years after the
Effective Date for a value sufficient to pay the Allowed Secured Claims held by
the Class 43 creditor, the injunction shall be lifted as provided herein to
permit the Class 43 creditor to pursue his lien rights at state law.
Class 45a. Allowed Secured Claims of ACSTAR. The Class 45a claims are
---------- ---------------------------------
comprised of the Allowed Secured Claims of ACSTAR which were secured by certain
letters of credit in the aggregate amount of $5,425,000 plus the Escrow Fund.
The ACSTAR Allowed Secured Claims are based upon the ACSTAR Bonds and ACSTAR
Moab Bond in the aggregate amount of $8,290,000 to secure Moab Cleanup
Obligations and Other Cleanup Obligations including the cleanup obligations
owing to the Class 45 claimant under the AGMI Plan. ACSTAR's secured claims
against Atlas, AGMI and APMI are cross collateralized. ACSTAR has drawn on the
letters of credit and is entitled to use the proceeds therefrom in order to pay
the Class 4 creditors under the Atlas Plan and to reimburse itself for the
actual amount incurred under the ACSTAR Bonds for Other Cleanup Obligations
including the cleanup obligations owing to the Class 45 claimant under the APMI
Plan,
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and its unpaid fees and expenses. Furthermore, any amount remaining from
the Escrow Fund may be used by ACSTAR for the same purposes. To the extent any
funds remain from the Escrow Fund after satisfaction of the Other Cleanup
Obligations secured by the ACSTAR Bonds and any unpaid fees and expenses ACSTAR
has incurred on said Bonds, such funds shall be remitted to the Reorganized
Atlas. ACSTAR shall retain its rights under the escrow agreement. The
foregoing treatment shall constitute satisfaction in full of the Class 45a
Allowed Secured Claim.
Class 45b. Impaired Unsecured and Administrative Claims of ACSTAR. The
---------- -------------------------------------------------------
Class 45(b) claim is comprised of the unsecured deficiency claim which ACSTAR
has for the Other Cleanup Obligations which it has to pay, and unpaid fees and
expenses in excess of its Class 45(a) Allowed Secured Claim, which claim shall
not exceed $500,000. Any claim by ACSTAR that its claims are entitled to
treatment as a Class 40 Administrative Expense, under any theory, and any
potential claim against ARISUR, shall be waived and released. For purposes of
voting and feasibility the Class 45(b) claim shall be estimated at $500,000.
ACSTAR's unsecured claims against Atlas, AGMI and APMI shall collectively not
exceed $500,000. The claims shall be allocated among the estates based upon
actual damage, with the claim applied first to AGMI, then to APMI and then to
Atlas. The actual amount of the Class 45(b) monetary claim allowed against AGMI
shall be paid as a Class 49 Allowed Unsecured Claim. On the later of Effective
Date of the AGMI Plan or at such time as the Class 45(b) creditors claim is
actually determined, it shall receive in full satisfaction of its claim a
monetary claims equal to the actual amount expended for Other Cleanup
Obligations, plus fees and expenses, not to exceed $500,000, which shall be
treated as a Class 49 unsecured claim and shall receive shares representing its
pro rata share (determined with respect to Class 49 and 50 claimants) of the
outstanding common stock of the Reorganized AGMI; provided that distributions
to the Class 45(b) creditor shall be held by a mutually acceptable escrow agent
pending determination of ACSTAR's responsibility for the Other Cleanup
Obligations. If Bonds #5659, #5660 and #5661 for the Gold Bar property are
terminated without being called and/or there is no unsecured deficiency, the
Allowed Class 45(b) claim shall be $0 and the shares which are being held in
escrow shall remain treasury stock.
Under the terms of the Agreement with ACSTAR, the total unsecured claim
arising from the bonds to secure the cleanup of Gold Bar shall not exceed
$500,000 and the total secured claim shall not exceed $425,000. ACSTAR's
unsecured claims against Atlas, and AGMI and APMI shall collectively not exceed
$500,000. The claims shall be allocated among the estates based upon actual
damage, with the claim applied first to AGMI, then to APMI and then to Atlas.
Thus, under the Agreement the total value of the Class 45(a) and (b) claims
shall not exceed $925,000.
Class 47. Impaired Secured Claims of United States Fire Insurance Company.
--------- ----------------------------------------------------------------
Class 47 is comprised of the Allowed secured claims of United States Fire
Insurance Company which issued Bond Numbers 6101757263 and 6101757189 secured by
a letter of credit issued by Norwest Bank in the amount of $750,000 to secure
the Debtor's cleanup obligations at the Gold Bar property. The Class 47
Claimant has called the letter of credit. The Class 47 claimant and the Debtor
shall retain all rights, without modification, under Bond Numbers 6101757263 and
6101757189 and the proceeds from the letter of credit. Demand has not been made
upon the Bonds, and therefore the claims of the Class 47 creditor are
contingent. To the extent that the Bonds are called and the proceeds of the
letter of credit are insufficient to pay the allowed claims of the Class
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<PAGE>
47 Claimant in full, the Class 47 claims are impaired and the deficiency claims,
up to $750,000, shall be treated as a Class 49 unsecured claim.
Class 48. Administrative Convenience Class. Class 48 is comprised of the
--------- ---------------------------------
claims of unsecured creditors with allowed claims of $1,000 or less and
unsecured creditors holding claims in excess of $1,000 electing to accept $1,000
in full payment of their claims. The Class 48 claims shall be paid in full
without interest on the Effective Date. Creditors wishing to elect to have
their claim treated under Class 48 shall make an election in writing to be
received by undersigned counsel for the Debtor on or before the due date for
tendering ballots to this Plan. There are three creditors whose claims total
$638.90 which fall within Class 48. In addition, there are two additional
creditors with claims totaling $2,000 and $5,257 which the Debtor estimates may
elect to be treated as Class 48 claims. Thus, the Debtor estimates that the
allowed Class 48 claims will total $2,638.90
Class 49. Allowed Unsecured Claims. Class 49 is comprised of the Allowed
--------- -------------------------
Unsecured Claims against AGMI. The Allowed Class 49 creditors shall receive:
(A) Their pro rata share of the proceeds of from the sale or joint
venture of AGMI's interests in the Gold Bar after payment of costs of sale
and after satisfaction of the Allowed Class 40, 41 and 43 Claims. The funds
shall be distributed on a Pro Rata basis between the Allowed Claims of the
Class 49 and 50 creditors who for shall be treated as one class.
(B) Their pro rata share of the common stock to be issued by the
Reorganized AGMI. The stock shall be distributed on a Pro Rata basis
between the Allowed Claims of the Class 49 and 50 creditors. For purposes
of this distribution, the Class 49 and 50 Creditors shall be treated as one
class.
(C) The Class 49 and 50 claims shall bear interest at the rate of 8
percent per annum from the Effective Date. Interest shall be payable only
if the proceeds of the sale as provided in (A) above are sufficient to pay
the Allowed Class 49 and 50 claims in full.
The Debtor believes that the value of the Class 49 Claims, exclusive of the
Class 45(b) and Class 50 creditors, and exclusive of those which the Debtor
estimates will elect to be treated as Class 48 creditors, total $0. Any Allowed
Class 45(b) claim shall be treated as a Class 49 unsecured claim. Exhibit K is a
list of the claims the Debtor believes comprise the Class 49 claims, including a
statement of this claims which are disputed.
Class 50. Claims Held by APMI. Class 50 is comprised of the claims held
--------- --------------------
by APMI other than its claims as an interest holder treated under Class 53.
Class 50 claims arise from an inter-company payable for cash advanced to AGMI.
The allowed claim of AGMI under the Atlas Plan shall first be offset against
AGMI's obligations to APMI which will reduce the accounts receivable owed by
APMI to Atlas. The net Allowed Class 50 Claim shall be treated on a Pro Rata
basis with the Class 49 creditors and shall its pro rata share of the
distributions of proceeds of sale of AGMI's interest in the Gold Bar property
and stock issued by the Reorganized AGMI.
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The prepetition intercompany receivables are calculated as of January 26,
1999, the date of the bankruptcy filings by APMI and AGMI. Atlas Corporation is
a creditor of APMI holding a prepetition unsecured claim of $26,753,941. APMI
is a creditor of AGMI holding a prepetition unsecured claim of $11,867,299.
AGMI is a creditor of Atlas holding a prepetition unsecured claim of $4,488,260.
After setoff, the claim held by APMI against AGMI shall be reduced to $7,679,039
which shall be used for determining APMI's share of the stock of the Reorganized
AGMI. The claim held by Atlas against APMI shall be reduced to $22,565,688.
The treatment of the claims held by Atlas against APMI are discussed under Class
28 of the APMI Plan. In addition, AGMI and APMI have outstanding administrative
expense claims owing to Atlas from the payment of post-petition obligations of
AGMI and APMI. The treatment of the administrative claims are addressed in
Class 20 of the APMI Plan and Class 40 of the AGMI Plan.
Class 51. Claims Held by Any Taxing Authority for Penalties Not Related to
--------- ----------------------------------------------------------------
Actual Pecuniary Loss. The Class 51 Claims are comprised of any penalty claims
- ----------------------
held by any taxing authority which are not related to actual pecuniary loss.
The Class 51 claims shall not receive any distribution of stock of the
Reorganized AGMI.
Class 52. Late Filed Claims. Class 52 is comprised of all late filed
--------- ------------------
claims against AGMI. The Class 52 claims shall be disallowed and shall receive
no distribution under the AGMI Plan unless and until the Class 49 and 50 claims
have been paid in full with interest at 8 percent per annum.
Class 53. Interests of APMI. Class 53 is comprised of the interests of
--------- ------------------
APMI which holds one-hundred percent of the stock of AGMI. The interests of the
Class 53 interest holder shall be voided. The Class 53 Interest Holder shall
receive no distributions on account of its interests unless and until the Class
49, and 50 claims have been paid in full with interest at 8% per annum.
4. MEANS FOR THE IMPLEMENTATION AND EXECUTION OF THE AGMI PLAN
On or about the Effective Date, all assets of AGMI shall be transferred to
the Reorganized AGMI free and clear of all liens, claims, and interests of
creditors, equity holders, and other parties in interest, except as otherwise
provided herein. Specifically, the assets shall be transferred subject to the
liens held by the Class 43, secured creditor and any Class 41 creditor with
perfected liens. The Class 44, 45(a) 46 and 47 creditors shall retain the
collateral securing their claims. The Reorganized AGMI shall not, except as
otherwise provided in this Plan, be liable to repay any debts which accrued
prior to the Confirmation Date. Except as provided in this AGMI Plan, on the
Confirmation Date AGMI shall be granted a discharge under 11 U.S.C. (S) 1141.
On the Effective Date, AGMI shall begin implementing its Plan of
Reorganization pursuant to the terms for each class of claimants set forth
above. All payments under the AGMI Plan shall come from the cash held by the
Reorganized AGMI or proceeds of the sale of its interests in the Gold Bar
property after costs of sale. The Class 40 administrative expenses may be paid
from advances by the Reorganized Atlas.
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<PAGE>
The Reorganized AGMI shall distribute the proceeds from the sale, joint
venture or other agreement compensating AGMI for its interests in the Gold Bar
property, after payment of costs, in order of priority as established in the
AGMI Plan within fifteen days after the close of the calendar quarter in which
the proceeds were received.
If the Allowed Secured Claims secured by AGMI's interests in the Gold Bar
property has not been satisfied through the sale, joint venture, exploration
agreement or other agreement with respect to the property, by the five year
anniversary of the Effective Date, the injunction precluding action against AGMI
and its assets shall be lifted as of the first business day after the five year
anniversary of the Effective Date and the holders of Allowed Secured Claims
shall be entitled to pursue their state court remedies against the collateral
securing their claims.
The stock to be issued by the Reorganized AGMI to the Allowed Claims of the
Class 49 and 50 creditors shall be issued within 90 days after the Effective
Date. In determining the Pro Rata share to be distributed to Contested Claims
under Article X, the shares shall be reserved as if the Contested Claims were
allowed in full and held by the Reorganized AGMI pending resolution of the
dispute. If AGMI' objections to the claims are sustained by Final Order, the
shares shall not be issued.
The Reorganized AGMI may pursue any claims or recovery actions held by
AGMI, including but not limited to recovery under 11 U.S.C. (S)(S)544, 547, 548
and 549. The Reorganized AGMI may abandon any claim AGMI has against any third
party if it determines that the claim is burdensome or of inconsequential value
and benefit. The Reorganized AGMI is authorized to employ counsel to represent
AGMI in the litigation or any cause of action or claims held by AGMI.
All funds held by the Reorganized AGMI for distribution under the AGMI Plan
shall be held in accounts which meet the insurance and guaranty requirements 11
U.S.C. (S)345(b).
Following the Effective Date, the Reorganized AGMI may compromise
objections to Claims or causes of action referred to in this AGMI Plan without
notice and hearing for claims or causes of action asserted in the original
amount of $5,000 or less. Settlements or compromises of any claims or causes of
action asserted in the amount of $5,000 or more shall be subject to notice and
an opportunity for hearing under the provisions after notice in compliance with
the Local Rules of Bankruptcy Procedure.
After the Effective Date, the Reorganized AGMI exercising its business
judgment may sell, operate or abandon any of its assets. The Plan does not
provide that notice shall be given after the Effective Date of the abandonment
or sale of any of AGMI's assets due to the fact that the stock of the
Reorganized AGMI shall be distributed to the creditors who as shareholders shall
elect the Board of Directors and therefore the creditors shall have input into
the management of the Reorganized AGMI.
AGMI shall receive a discharge only to the extent permitted by 11 U.S.C.
(S) 1141 and AGMI shall be entitled to seek injunctive relief from the Court, if
necessary, to enforce any and all provisions of the Plan. Under the provisions
of 11 U.S.C. (S)1141(d)(3), APMI may not be entitled
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<PAGE>
to a discharge since it is not currently operating the properties and is
planning to liquidate substantially all of its assets. However, the confirmation
of the Plan shall result in the imposition of an injunction precluding creditors
from taking action against the assets of APMI except as provided in the Plan.
5. AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS OF AGMI
As may be required, the Articles and Bylaws of AGMI shall be amended on or
before the Effective Date to the extent necessary to effectuate the provisions
of the AGMI Plan, including but not limited to, reincorporating the Reorganized
AGMI under the laws of the State of Colorado, voiding its existing common stock
and issuing new common stock in compliance with the provisions of this AGMI
Plan. No fractional shares of stock shall be issued.
Board of Directors and Annual Shareholders Meeting.
---------------------------------------------------
The current Board of Directors shall serve until the next annual or special
meeting of shareholders, called in accordance with the Bylaws. At the annual or
special meeting, the shareholders shall elect a new Board of Directors.
D. ADMINISTRATIVE MATTERS IN THE ATLAS PLAN, AGMI PLAN AND APMI PLAN
Creditors should review the provisions for default and plan modification,
the general provisions, the provisions for assumption or rejection of executory
contracts, provisions as to contested claims, retention of jurisdiction set
forth in the Atlas Plan, the APMI Plan and the AGMI Plan.
VIII. DISCUSSION OF OPERATIONS UNDER THE ATLAS PLAN AND PROJECTIONS
The Atlas Plan contemplates that it will emerge from Chapter 11 as a public
company with little debt. The Atlas Plan provides that the unsecured creditors
will receive their pro rata share of the funds held on the Effective Date and
distributions of a portion of the proceeds from the sale of Grassy Mountain and
Gold Bar and the CGL claims, projected to be $2,625,100 over the life of the
Plan (See Exhibit C) plus their pro rata share of the stock of the Reorganized
Atlas. A public listing will be sought on a recognized exchange to insure that
there is a medium of exchange for creditors to trade their stock. The principal
asset of Atlas will be Arisur and its Bolivian operations, although Atlas will
also continue to pursue recovery of the value of its claims against AGMI and
APMI through realization of the value of their interests in Gold Bar and Grassy
Mountain, its causes of action, including any voidance actions in the Chapter
11 case and the insurance recovery claims under its Comprehensive General
Liability policies.
It is projected that Arisur will expand the Bolivian operations through
refinancing its loan with CAF. Additional capital may be obtained from CAF or
another third party. The projections contemplate that substantial cash flows
will start from Arisur following the year 2000 and that Atlas
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<PAGE>
will operate with significantly reduced administrative costs. The projections
for the operations attached hereto as Exhibit C reflect that by 2002 Arisur will
provide net cash flow of approximately $2,200,000 per year and that the ending
cash balance of Atlas and Arisur will be approximately $2.0 million in 2002,
$3.2 million in 2003 and $4.5 million in 2004. In addition the projections for
Atlas anticipate that the Grassy Mountain property will be sold by the year 2001
and that the value of Gold Bar will be realized through selling portions of the
mill over time. The projections anticipate that the value from the Grassy
Mountain and Gold Bar properties will be realized by the end of 2001 with Atlas'
share of the distribution totaling at least $2.0 million. Atlas will also
continue to pursue its CGL insurance recoveries and the ARD Claims. The CGL
recoveries may in fact exceed the estimate.
Atlas proposes to develop the Andacaba mine to increase productivity and
revenues in order to offset depressed metal prices. Development is necessary to
enable Arisur to increase the percentage of ore feed from the two principal
veins. Presently there are significant materials handling costs associated with
the mine because the ore must be carried great distances from the accessible
reserves to the Mill. Additionally, the portions of the mine which are
presently being mined have lower grades, thus have a lower percentage of metal
in the rock. The development, as proposed, will enable Arisur to mine the veins
with higher grades and lower handling costs, thus significantly increasing net
revenues from the mine. This will provide Arisur with a solid revenue stream,
increase mine life, increase the quality of accessible reserves and increase the
value of the assets. The development program involves installation of a 770
meter Trackless Ramp at a gradient of minus 10% to access the San Juan Vein at
the 4430 level. Fifty percent of the ore reserves lie below the 4500 level, or
up to 1.6 million tonnes. Prior to obtaining possible financing from CAF for
the development program at Andacaba, Atlas must fund a drilling program
estimated at $325,000 to be carried out in the fourth quarter 1999. This will
facilitate development commencing in July 2000. Arisur anticipates that the
completion of the project will take 17 months with the capital cost in the year
2000 at $1.36 million and $2.25 million in year 2001 Arisur projects increased
ore production by the seventh month with the development completed by the 17th
month. Arisur projects that the net present value of Arisur with the
development program coupled with existing production is $3.7 million.
The projections for Arisur's operations for 1999 and the five year forecast
attached hereto as Exhibit C. The projections contemplate that the amounts
received by AGMI and APMI from the sale of their assets are the net value after
reduction of costs of sale and any taxes associated with the sale. The forecasts
are based upon the assumptions set forth in Exhibit D:
Another possibility for Atlas following confirmation of the Plan is a
merger either of Atlas and Arisur to reduce administrative expenses or with an
outside entity.
The AGMI Plan contemplates that AGMI will seek to sell its assets at Gold
Bar and resolve its outstanding claims, including the environmental liability
claims. AGMI projects that the mill at Gold Bar alone could be sold for at
least $1.0 million and that the bonds posted are more than sufficient to cover
the environmental liability claims. At the current level of gold prices, AGMI
and APMI were unable to obtain a buyer for the Gold Bar property as a complete
asset. However, they have entered into the Vengold Agreement, subject to
Bankruptcy Court approval, pursuant to which
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<PAGE>
they retain a 2% smelter royalty interest up to $1,000,000 on the mining claims
transferred under the Agreement. In addition, certain of the assets, such as the
Mill and infrastructure are valuable to companies engaged in other mining
operations which are not impacted by gold prices. AGMI has reduced holding costs
by abandoning portions of the Gold Bar assets and is seeking a purchaser(s) for
the mill and equipment to achieve value. AGMI estimates that it will receive
$1.5 million for the sale of its interests in Gold Bar. AGMI believes that it
has reached an agreement with Eureka County to turn the road on the site (the
regrading and reseeding of which constitutes a significant part of the
environmental liability) into a County road. If an agreement can be finalized,
the environmental reclamation claims will be substantially reduced. AGMI does
not anticipate that there will be significant costs incurred by AGMI in
conjunction with the agreement to turn the road into a County road. The only
costs AGMI anticipates that it will incur is the cost to have representatives
participate in the necessary meetings and to approve the necessary
documentation. AGMI does not anticipate that these costs will exceed $10,000.
The costs will be funded by AGMI or by inter-company advances by Atlas. Further,
AGMI will incur property taxes post-confirmation to Eureka County. AGMI believes
that these taxes will not exceed $10,000 per year. These taxes shall be paid
from funds held by AGMI from the liquidation of its assets or by inter-company
advances by Atlas. In the event that the property taxes are not paid when due,
Eureka County will have the rights and remedies provided under Nevada law to
enforce its property tax claims against the property held by the Reorganized
AGMI which may result in a tax sale of the property during the Plan period.
The APMI Plan contemplates that APMI will seek a buyer for the Grassy
Mountain property. The projections contemplate that a sale of Grassy Mountain
will be accomplished by the close of 2001. Although the decline in gold prices
may have a negative impact on APMI's ability to sell Grassy Mountain in the near
future, the holding costs for Grassy Mountain are $50,000 per year. APMI plans
to hold Grassy Mountain until a better price can be obtained, which APMI
projects will occur in 2001. If a decision is made post-confirmation not to
sell Grassy Mountain but to hold it, a merger with the Reorganized Atlas may be
pursued to reduce administrative expenses in 2001.
Tax Consequences of Operations Under Plan
-----------------------------------------
The projections set forth in Exhibit C attached hereto are of the net
proceeds to be received on account of any sale and therefore contemplate that
any taxes due from the sale of assets have been satisfied. The Debtors shall be
subject to the provisions of the Internal Revenue Code regarding adjustment of
corporate tax attributes to the extent of debts discharged upon confirmation of
the Plan. Although, the Debtors will not have taxable income from the discharge
as a result of the exclusions of Section 108 of the Bankruptcy Code, their tax
attributes, including net loss carryforwards will be subject to adjustment.
This Disclosure Statement does not purport to give tax advice to any creditor or
interest holder. You should consult your tax advisor regarding the tax
consequences of the Chapter 11 proceedings on your taxes.
IX. ANALYSIS OF CLAIMS
Under the Bankruptcy Code, a creditor may be able to participate in an
estate whether or not a Proof of Claim has been filed, provided the Debtor has
not scheduled the claim as disputed, contingent or unliquidated. The Bankruptcy
Court has set a bar date for filing proofs of claim of
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January 15, 1999, in the Atlas case and April 30, 1999 in the AGMI and APMI
cases. If a creditor did not timely file a proof of claim, its claim under the
Plan will be the amount set forth in the Debtors' Schedules of Assets and
Liabilities and if the claim was scheduled as disputed, contingent or
unliquidated it shall be disallowed.
As of the date of this Disclosure Statement, and to the best of the
Debtor's knowledge, the following is an estimate of the total claims which are
reflected in the Schedules, and amendments filed with the Bankruptcy Court and
the amounts which will be paid pursuant to the Plan.
A. ATLAS PLAN
CLASS TYPE OF CLAIM TOTAL
- ----- AMOUNT TREATMENT PROPOSED
CLAIMED UNDER ATLAS PLAN
- --------------------------------------------------------------------------------
1. Administrative Expense 80,000.00/5/ Payment on Effective Date
- --------------------------------------------------------------------------------
2. Wage Claims 13,802.77 Payment on Effective Date
- --------------------------------------------------------------------------------
3. Tax Claims 0.00/6/ Payment within 6 years of
Date of assessment
- --------------------------------------------------------------------------------
4. Environmental Liability 121 Million Claims treated under the Moab
Claims Uranium Transfer
Agreement. Certain assets
transferred in satisfaction
of the claims.
- --------------------------------------------------------------------------------
5(a) ACSTAR secured claim $ 8,290,000/7/ Draw on collateral of
$5,675,000 less $189,000
previously applied. Balance
of Escrow Fund as of 6/30/99
$5,498,984.32.
- --------------------------------------------------------------------------------
- ----------------
/5/ Administrative expense claims estimated to be $80,000
representing the professional fees of $40,000 which are estimated to have not
been paid through interim fee applications. All other professional fees have
been paid under the terms of the Interim Compensation Procedure Order and all
other postpetition obligations will be paid in full and one months accounts
payable estimated at $40,000. The PBGC has asserted an administrative expense
claim for penalties in the amount of $272,800 which has not been included as
Atlas believes under prevailing case law they are not entitled to administrative
status.
/6/ The Internal Revenue Service has filed a claim in the amount of
$61,138.43 as an excise tax as a result of the Debtor's failure to fund the
Defined Benefit Plan. Atlas believes that this claim is treated under Class 13.
/7/ This reflects the total bonds posted by ACSTAR, including the
bonds to secure the cleanup of the Moab Utah Site. The bonds are cross-
collateralized. ACSTAR's claim will be treated in accordance with the agreement
between the parties.
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<PAGE>
- -------------------------------------------------------------------------------
5(b) ACSTAR unsecured and Up to $500,000 Under the MUMTA, ACSTAR
administrative claims. has an unsecured claim
against the estates of
Atlas, AGMI and APMI to be
allocated among the 3 as
follows: first to AGMI
then to APMI and finally
to Atlas. Atlas Claims
treated on a pro rata
basis with Class 10.
- --------------------------------------------------------------------------------
6. Secured Claims 677,242.17/8/ Retain rights to
collateral of $764,092.46
- --------------------------------------------------------------------------------
7. Retiree Medical Plan unknown/9/ Retain rights under Plan.
- --------------------------------------------------------------------------------
8. Executory Contracts and 0.00/10/ Assume or Reject by
Unexpired Leases Confirmation
- --------------------------------------------------------------------------------
9. Asbestos claims $4.5 million/11/ Elect to pursue insurance
coverage or treated under
Class 10
- --------------------------------------------------------------------------------
10. Unsecured Claims $9,480,253.41 if Receive pro rata share of
objections to claims :(1) Cash on effective
are sustained and date less up to $800,000
$12,053,276.44 if working capital and
they are not amounts to pay Class 1 and
sustained. /12/ 2 claim; (2) Pro rata
share of 75% of Atlas'
share of proceeds from
AGMI and APMI including
sale of Gold Bar or Grassy
Mountain; (3) 10% of the
net recoveries up to $1.5
million and 50% of the net
recoveries in excess (4)
Pro Rata share of 67.5% of
the stock of the
Reorganized Debtor
calculated with the Class
12 claimants. The stock
split pro rata between
classes 10, and 12.
- --------------------------------------------------------------------------------
- -------------------
/8/ Based upon projections that only allowed Class 6 secured claim
is claim of Environmental Protection Agency arising from cleanup obligations at
Coalinga.
/9/ There is no default under the terms of the Retiree Medical
Plan. Atlas' obligations under the Plan will continue.
/10/ Claim is valued at $0 as Atlas is not in default post-petition
under the provisions of its unexpired leases.. Projections contemplate that
Atlas will not assume its office lease and any default prepetition shall be
treated as a Class 10 claim. See Exhibit I.
/11/ Comprised of timely filed claims for personal injury or torts
with damages asserted of at least $4.5 million.
/12/ See schedule of Class 10 claims attached as Exhibit I.
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<PAGE>
11. Unsecured Claim of AGMI $ 4,488,260 Offset claim owing by APMI to
Atlas.
- --------------------------------------------------------------------------------
12. Shipes Parties $ 2,250,000/13/ Receive pro rata share with
Class 10 creditors of 67.5%
of the stock of the
Reorganized Atlas.
- --------------------------------------------------------------------------------
13. Gerald E. Davis $ 5,000 Under settlement agreement
receives $5,000 on effective
date, security interest in
collateral held by AGMI up to
$60,000 and unsecured claim
treated under Class 10 in the
amount of $120,246.
- --------------------------------------------------------------------------------
14. Penalty Claims $ 61,138.43 Allowed claims treated on pro
rata basis with Class 10
except to not receive stock.
- --------------------------------------------------------------------------------
15. Stockholders holding 1,000 Voided unless pay $15 per
shares or less. year to maintain stock.
- --------------------------------------------------------------------------------
16. Stockholders holding more Retain shares but diluted
than 1000 shares such that hold pro rata
share of 15% of Reorganize
Atlas.
- --------------------------------------------------------------------------------
17. Warrants and Options Voided
- --------------------------------------------------------------------------------
18. Late filed claims Disallowed and receive no
distribution.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
B. APMI PLAN
- --------------------------------------------------------------------------------
CLASS TYPE OF CLAIM TOTAL TREATMENT PROPOSED
AMOUNT UNDER APMI PLAN
CLAIMED
- --------------------------------------------------------------------------------
20. Administrative Claims $ 206,985/14/ Paid on Effective Date or
when assets are sold.
- --------------------------------------------------------------------------------
- --------------------
/13/ Claim allowed under Settlement Agreement resolving Shipes
Litigation. Stipulated that Shipes Parties have a Class 10 unsecured claim in
the amount of $580,000 and a subordinated debt claim in the amount of $2,250,000
which shares on a pro rata basis for purposes of issuance of stock.
/14/ As of August 31, 1999. The amount at confirmation may be
higher.
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<PAGE>
- --------------------------------------------------------------------------------
21 Tax Claims None Paid from proceeds of
property securing lien
within 6 years of
assessment or granted
leave to foreclose tax
lien.
- --------------------------------------------------------------------------------
22 Executory Contracts and 0.00/15/ Assume or Reject by
Unexpired Leases Confirmation
- --------------------------------------------------------------------------------
23 Merrill Lynch $5,425,000 Paid through
collateral held in the
amount of $5,425,000
- --------------------------------------------------------------------------------
24 State of Oregon Contingent claim Retain rights under
146,200 or less bonds in amount of
$146,200
- --------------------------------------------------------------------------------
25(a) ACSTAR secured claim $ 8,290,000/16/ Draw on collateral of
$5,675,000 less
$189,000 previously
applied. Balance of
Escrow Fund as of
6/30/99 $5,498,984.32.
- --------------------------------------------------------------------------------
25(b) ACSTAR unsecured and Not to exceed Under the MUMTA has
administrative claims $500,000 an unsecured claim
against the estates
of Atlas, AGMI and
APMI to be allocated
among the 3 as
follows: first to AGMI
then toAPMI and
finally to Atlas.
Claims against APMI
treated on a pro rata
basis with Classes 27
and 28
- --------------------------------------------------------------------------------
26. Administrative 590 Paid in full on
Convenience effective date
- --------------------------------------------------------------------------------
27 General Unsecured $524,062 if Receive pro rata
objections to claims share of the
are sustained and distribution of the
2,528,962 if they proceeds ofthe sale
are not sustained of Grassy Mountain
and Gold Bar property
and receive stock of
Reorganized APMI on
prorata basis with
Allowed class 25(b)
and 28 claims
- --------------------------------------------------------------------------------
- -----------------
/15/ Claim is valued at $0 as APMI is not in default under the
provisions of its unexpired leases.
/16/ This reflects the total bonds posted by ACSTAR, including the
bonds to secure the cleanup of the Moab Utah Site. The bonds are cross-
collateralized. ACSTAR's claim will be treated in accordance with the agreement
between the parties.
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<PAGE>
28 Unsecured claim of Atlas 22,265,688 Receive pro rata share of the
distribution of the proceeds
of the sale of Grassy
Mountain and Gold Bar
property and receive stock on
pro rata basis with Allowed
class 25(b) and 27 claims
- --------------------------------------------------------------------------------
29 Gerald E. Davis. $0.00 Convey a security interest in
whatever interest APMI holds
in the Davis Collateral.
- --------------------------------------------------------------------------------
30 Penalty Tax Claims $0.00 Treated as unsecured
creditors but do not receive
stock.
- --------------------------------------------------------------------------------
30 Late Filed Claims $0.00 Receive no distributions
until classes 27 and 28 paid
in full
- --------------------------------------------------------------------------------
31 Stock Interests of Atlas Voided
C. AGMI PLAN
CLASS TYPE OF CLAIM TOTAL TREATMENT PROPOSED
- ----- ------------- AMOUNT UNDER APMI PLAN
CLAIMED
-------
- --------------------------------------------------------------------------------
40 Administrative Expenses $ 146,923./17/ Paid on Effective Date or
when assets are sold
- --------------------------------------------------------------------------------
41 Tax Claims $0.00/18/ Paid in full within 6 years
or property subject to liens
will be turned over to lien
claimants in order of
priority
- --------------------------------------------------------------------------------
42 Executory Contracts and 0.00/19/ Assume or Reject by
Unexpired Leases Confirmation
- --------------------------------------------------------------------------------
- ---------------
/17/ As of August 31, 1999. The amount at confirmation may be
higher.
/18/ Eureka County has asserted a claim in the amount of
$236,696.62. AGMI believes that in an action under Section 505 of the Code, it
will be determined that due to credits from prior years that there are in fact
no taxes owing.
/19/ Claim is valued at $0 as AGMI is not in default under the
provisions of its unexpired leases.
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<PAGE>
- --------------------------------------------------------------------------------
43 Gerald E. Davis 60,000/20/ Paid from sale of AGMI's
interest in Gold Bar or if
not sold within 5 years
after Effective Date, relief
from the injunction granted
to pursue foreclosure.
- --------------------------------------------------------------------------------
44 Bureau of Land Contingent Retain rights under Bonds in
Management Environmental amount of $3,176,000.
Reclamation
claims. Claim filed
in amount of
$3,125,205./21/
- --------------------------------------------------------------------------------
45(a) ACSTAR secured claim $8,290,000/22/ Draw on collateral of
$5,675,000 less $189,000
previously applied. Balance
of Escrow Fund as of 6/30/99
$5,498,984.32.
- --------------------------------------------------------------------------------
45(b) ACSTAR unsecured and Not to exceed Under MUMTA has an unsecured
administrative claims $500,000 claim against the estates of
Atlas, AGMI and APMI to be
allocated among the 3 as
follows: first to AGMI then
to APMI and finally to
Atlas. Claims against AGMI
treated on a pro rata basis
with Classes 47, 49 and 50
- --------------------------------------------------------------------------------
46 Norwest Bank $750,000 Paid from certificate of
deposit in amount of
$750,000
- --------------------------------------------------------------------------------
47 U.S. Fire $1,500,000 Retain rights to letter of
credit $750,000. Balance
treated on pro rata basis
with Class 45(b), 47, 49 and
50.
- --------------------------------------------------------------------------------
- -----------------
/20/ Under the terms of the Settlement Agreement with Davis, Davis
has a security interest up to $60,000 in the Davis Collateral.
/21/ The BLM has filed a claim in the amount of $3,125,205. The
bonds securing the Gold Bar property total $3,176,000. Under the Plan, AGMI
assumes that the environmental liabilities are less than filed and that under
the sale of the Gold Bar Property that the purchaser agrees to cover the
deficiency in the reclamation obligations.
/22/ This reflects the total bonds posted by ACSTAR, including the
bonds to secure the cleanup of the Moab Utah Site. The bonds are cross-
collateralized. ACSTAR's claim will be treated in accordance with the agreement
between the parties.
-98-
<PAGE>
- --------------------------------------------------------------------------------
48 Administrative Convenience $2,638.90/23/ Paid on Effective Date
- --------------------------------------------------------------------------------
49 Unsecured creditors $0.00 if objections Receive pro rata share
to claims are of distributions from
sustained and the sale of the Gold
$2,004,900 if they Bar assets and receive
are not./24/ stock of reorganized
AGMI with Classes
45(b), 47 and 50
- --------------------------------------------------------------------------------
50 Unsecured claim of APMI $ 7,379,039 Receive pro rata share
of distributions from
the sale of the Gold
Bar assets and receive
pro rata share of
stock of reorganized
AGMI with Classes
45(b), 49 and 50.
- --------------------------------------------------------------------------------
51 Tax Penalty Claims $0.00 Treated as unsecured
claim
- --------------------------------------------------------------------------------
52 Late Filed $0.00
- --------------------------------------------------------------------------------
53 Stock Interests of APMI Voided
- --------------------------------------------------------------------------------
X. ALTERNATIVES TO THE PLAN - LIQUIDATION ANALYSIS
An alternative to confirmation of the Atlas Plan, the AGMI Plan and the
APMI Plan is conversion of one or all the cases to a liquidation proceeding
under Chapter 7. The Debtors believe that liquidation of their respective
assets would result in the creditors receiving less than they would receive
under the Atlas Plan, the AGMI Plan and the APMI Plan. This liquidation
analysis reflects what each Debtor believes is the best possible recovery in a
liquidation. The actual recovery if the Debtors were liquidated may be more or
less.
The following is a summary of the liquidation value of the respective
Debtors as of the date of this Disclosure Statement. The values have been
established by the Debtors applying a discount factor to reflect an immediate
forced sale. The following is the Debtor's best estimate of liquidation values
which the debtor believes accurately reflects the amount recoverable in
liquidation. The actual liquidation values may vary considerably.
In preparing the liquidation analysis, the Debtors have assumed that the
Chapter 7 Trustees will reach a stipulation resolving the inter-company
receivables to treat them in the same manner as
- -------------------
/23/ There are three creditors whose claims total $638.90 which fall
within Class 48. In addition, there are two additional creditors with claims
totaling $2,000 and $5,257 which the Debtor estimates may elect to be treated as
Class 48 claims. Thus, the Debtor estimates that the allowed Class 48 claims
will total $2,638.90
/24/ AGMI estimates that all unsecured creditors which do not fall
within other classes will elect treatment as a class 46 administrative
convenience claim and that the objections to the claims of the PBGC are
sustained.
-99-
<PAGE>
treated under the Plans, i.e. that the claims are treated as follows: the
allowed claim of AGMI against Atlas shall first be offset against AGMI's
obligations to APMI which will reduce the accounts receivable owed by APMI to
Atlas. After setoff, the claim held by APMI against AGMI shall be reduced to
$5,729,039 and the claim held by Atlas against APMI shall be reduced to
$22,565,688.It is assumed that the Trustees will resolve the claims in this
manner because due to the triangular nature of the obligations, it is impossible
to ever finalize the values as AGMI owes APMI who owes Atlas who owes AGMI.
A. LIQUIDATION VALUE OF ATLAS
Even in a liquidation analysis the Moab Utah Assets are transferred to the
Reclamation Trust to be established under the MUMTA, approved by Order of the
Court. The liquidation analysis presumes that there is no value to Atlas from
Arisur because there are significant funds required for Arisur to cure its
default under the CAF Loan and to complete the drilling program which is
required before any loans for development will be granted. The projections for
the Reorganization establish that the revenue of Arisur in 1999 is not
sufficient to meet these obligations without assistance from Atlas. Once the
redevelopment is commenced, the projections establish that there is considerable
value for Arisur. This value will not be realized in a liquidation because
unless Arisur is able to negotiate a restructure of the loan obligation and cure
its default under the Loan, CAF will foreclose upon the assets at the Andacaba
Mine. If CAF forecloses, there is no value to the estate from the receivable
owed by Arisur nor the Arisur assets.
<TABLE>
<CAPTION>
<S> <C> <C>
Value under Plan Liquidation Value
- ------------------------------------------------------------------------------------------------
Moab Utah Assets, including millsite, and $ 0.00/25/ $ 0.00/26/
adjoining property
- ------------------------------------------------------------------------------------------------
Moab Water Rights 00.0/27/ 0.00/28/
- ------------------------------------------------------------------------------------------------
Cash and Short Term Investments 978,337 978,337/29/
- ------------------------------------------------------------------------------------------------
</TABLE>
- -----------------
/25/ Under the terms of the Plan and the Moab Uranium Millsite
Transfer Agreement the Moab Utah Assets are transferred to the Reclamation
Trust.
/26/ Liquidation value placed at $0.00. Assets transferred under
the Moab Uranium Millsite Transfer Agreement and thus there is no value for the
estate.
/27/ Under the terms of the Plan and the Moab Uranium Millsite
Transfer Agreement the Water Rights are transferred to the Reclamation Trust.
/28/ Liquidation value placed at $0.00 assets transferred under
the Moab Uranium Millsite Transfer Agreement.
/29/ Funds held by the Debtor as of June 30, 1999. Assumes any
liquidation took place on the same date. The actual liquidation value will be
reduced by the funds expended for operations subsequent to June 30, 1999 and the
date of liquidation.
-100-
<PAGE>
Restricted Cash 235,000/30/ 0.00/31/
- --------------------------------------------------------------------------------
Receivable - APMI 2,549,009/32/ 71,701/33/
- --------------------------------------------------------------------------------
Receivable from Arisur 793,000/34/ 0.00/35/
- --------------------------------------------------------------------------------
Administrative claim against AGMI 146,923 146,923
- --------------------------------------------------------------------------------
Administrative claims against APMI 206,985 206,985
- --------------------------------------------------------------------------------
Prepaid Expenses 119,773 0.00/36/
- --------------------------------------------------------------------------------
Value of Arisur Inc. 6,700,000/37/ 0.00/38/
- --------------------------------------------------------------------------------
Investment in Atlas Precious Metals 0.00/39/ 0.00
- --------------------------------------------------------------------------------
- ------------------
/30/ Value reflects transfer of the $5,250,000 from the ACSTAR bonds
to the Reclamation Trust under the MUMTA and that ACSTAR applies $190,000 from
its collateral to outstanding premium charges, leaving a balance of $235,000. It
is assumed that Atlas will not receive any of the Restricted Cash for use in its
operations.
/31/ Restricted cash is pledged to secure the Debtor's obligations to
ACSTAR for the bonds. In a liquidation the restricted cash will be paid to
ACSTAR and therefore is valued at 0.
/32/ Calculated based upon Atlas' pro rata share of the distributions
of APMI under the APMI Plan assuming that objections to claims are sustained. If
the objections are not sustained, Atlas' pro rata share of the distributions is
reduced by $187,822 to $2,136,187.
/33/ Calculated that Atlas' allowed claim against APMI is 95% of the
allowed claims in a Chapter 7 assuming that the Class 25(b) claim of ACSTAR is
allowed in full, that objections to claims are sustained and hat Atlas receives
that percentage of the distribution of a liquidation of APMI. If the objections
to claims are not sustained, Atlas' share is reduced to 88 percent or 66,418.
/34/ As of June 30, 1999.
/35/ There is no value for the Arisur receivable in a liquidation.
Arisur is in default under the CAF Loan, and is unable to restructure and cure
its defaults under its loan to CAF without financial assistance from Atlas. If
Atlas were liquidated and unable to fund the drilling and other programs, CAF
would accelerate loan obligation of Arisur and foreclose upon its assets. Once
CAF foreclosed, there would be no value remaining for unsecured creditors of
Arisur, including Atlas. Therefore, in a liquidation, there is no value to Atlas
from the Arisur receivable. The Loan Documents preclude Arisur from paying Atlas
while it is in default of the provisions of the Loan Agreement.
/36/ The prepaid expenses include prepaid insurance including
directors and officers liability insurance which the Debtor amortizes. The
Debtor does not believe that there is any net recoverable value in a
liquidation.
/37/ This value is derived by taking a discounted net present value of
the cash flow of Arisur. The number is obtained by taking the average annual
cash flow of Arisur commencing 2002 of $2.0 million, assuming that the cash flow
stays steady and does not grow thereafter for six years and discounting back to
the present (2002) by a discount factor of 15 percent.
/38/ Atlas projects that in a liquidation, CAF will accelerate the
loan and foreclose the Arisur assets leaving no value for the estate.
/39/ Under the APMI Plan Atlas ` stock interest is voided. Further, in
a liquidation the assets of APMI are insufficient to pay the claims in full and
therefore there is no value to the stock interest.
-101-
<PAGE>
- --------------------------------------------------------------------------------
Equity Interest in Suramco Metals, Inc. 0.00/40/ 0.00
- --------------------------------------------------------------------------------
Title X Receivables (as of 8/31/99) 0/41/ 0
- --------------------------------------------------------------------------------
ARD Receivable 200,000/42/ 175,000/43/
- --------------------------------------------------------------------------------
CGL Insurance Recoveries 2,000,000/44/ 1,500,000/45/
- --------------------------------------------------------------------------------
Office equipment, furniture and supplies 15,000 12,000/46/
- --------------------------------------------------------------------------------
Recoveries of Avoidable Transfers 0/47/ 0
- --------------------------------------------------------------------------------
TOTAL VALUE $13,944,027 $ 3,090,946
- --------------------------------------------------------------------------------
The Atlas Plan provides for payment of cash distributions to creditors
over the life of the Plan of $2,625,100 plus 67.5% of the stock of the
Reorganized Atlas. The cash to be distributed to the unsecured creditors is
after costs of administration and payment of classes with priority. See Exhibit
C attached hereto. Atlas believes that the value of the stock to be distributed
to unsecured creditors under the Atlas Plan is worth at least $4,522,500 which
is valued at 67.5% of the value of its interest in Arisur calculated under a
discounted cash flow analysis and defined above.
- -------------------------
/40/ Valued at $0 since has no assets or business.
/41/ Under MUMTA Atlas retains Old Title X Receivables up to $
675,000. Atlas has collected the receivable in the amount of $552,000 which is
reflected in the Cash and Short Term Investments listed above.
/42/ Under MUMTA Atlas retains 50% of the ARD receivable. Atlas
maintains that it is entitled to a disputed Title X claim for mill dismantling
performed by American Reclamation and Dismantling Inc. Under the Plan Atlas
projects that the recovery of its 50% interest will be $250,000 less legal fees
of $50,000.
/43/ In a liquidation, the Debtor projects that there will be
additional expenses associated with the collection of the ARD Receivable. The
recovery will require assistance of individuals with knowledge of the
complicated factual and accounting transactions associated with the collection.
Under the Plan of Reorganization, the Debtor will retain the services of its
officers on a consulting basis. In a liquidation, the Trustee would have
additional expenses associated with consulting fees. Atlas has projected that a
trustee would incur additional expenses of $25,000.
/44/ Debtor's claims against its comprehensive general liability
policies are valued at $2,900,000 less costs of collection of $900,000, and are
estimated to net $2.0 million as estimated by Risk International.
/45/ In a liquidation Atlas believes that there will be additional
costs to recover on the Debtor's CGL policies. The claims will involve complex
and technical factual data. Under the Plan, the Debtor will retain the services
of Richard Blubaugh to assist in the recovery. The recovery by the Trustee will
require the trustee to retain services of professionals to evaluate and
reconstruct the data which the Debtor anticipates will cost an additional 25% of
the recovery.
/46/ Value in a liquidation reduced by 20 percent for costs of sale.
/47/ Atlas does not believe that there are any recoveries from
avoidable transfers under Sections 547 and 548 of the Bankruptcy Code. Atlas
during the 90 days prior to the filing of the petition was only paying current
obligations in exchange for goods or services and was making payments in the
ordinary course of business. Further, there were no transfers for less than
adequate consideration. Atlas asserted avoidance claims against Gerald Davis
which were settled during in the Davis Settlement.
-102-
<PAGE>
Projected distribution Chapter 11 Chapter 7
Reorganization Liquidation
- --------------------------------------------------------------------------------
Assets $13,944,027 3,090,946
- --------------------------------------------------------------------------------
Less Costs of Administering Estate See Exhibit C 235,000/48/
- --------------------------------------------------------------------------------
Less Chapter 7 Trustee Fees $ 115,978/49/
- --------------------------------------------------------------------------------
Net Value to Estate 13,944,027 2,739,968
- --------------------------------------------------------------------------------
Unpaid Administrative Expense Claims 80,000/50/ 140,000/51/
from Chapter 11
- --------------------------------------------------------------------------------
Payments of Class 2 Wage Claims 13,802 13,802
- --------------------------------------------------------------------------------
Value for Unsecured Creditors Under Plan receive 2,586,166
$2,625,100 plus
67.5% of the stock
of the Reorganized
Atlas valued at
$4,522,500. Total
value to unsecured
creditors estimated
at $7,147,600
- --------------------------------------------------------------------------------
Percentage Distribution 27% cash plus stock 15%
worth another 38% of
the claims
- --------------------------------------------------------------------------------
- --------------------
/48/ The professional fees to be incurred by the estate in
collecting the CGL and ARD claims have reduced the amounts to be collected
above. The estate would also incur fees for the professionals retained by the
Chapter 7 estate including accountants to prepare tax returns estimated at
$10,000. In addition, to successfully collect the CGL, the Trustee would have to
retain the services of someone familiar with the facts on a contractual basis
which is estimated at the $30,000 per year to be paid to Richard Blubaugh under
the Reorganization Plan. In addition, Atlas estimates that there will be legal
fees incurred in the estate of $20,000. The estate would also incur fees for
care and maintenance of the Moab Utah Assets under MUMTA of $10,000 per month
through December 31, 1999. In addition, the Estate will incur fees for
environmental counsel to complete the transfer of the Moab Assets estimated at
$40,000. Additionally, the estate will incur expenses estimated at $25,000 for
storage and transfer of the documents required under the MUMTA and to preserve
the documents for pursuit of the CGL claims. In addition, there will be costs of
contract labor to compile and prepare the documents for transfer estimated at
$20,000.
/49/ Assumes trustee's fees paid at maximums set forth in Section
326(a) of the Code.
/50/ Comprised of the fees of professionals which have not been
paid under the Interim Compensation Procedure by fee applications and one
month's accounts payable which are estimated to be outstanding on the Effective
Date. The projections attached in Exhibit C provide for the payment of
professional fees through confirmation and post-confirmation.
/51/ Includes the professional fees which have not been paid
through fee applications through August 31, 1999. The projections under the Plan
presume that all fees are paid under the Interim Compensation Order for those
professionals who are filing fee applications. In a liquidation there would be
fees by all which have not been subject to fee applications and amounts
outstanding under the Interim Compensation Order for the month of and prior to
conversion estimated at $100,000.
-103-
<PAGE>
Under the Plan of Reorganization, the Class 10 claims are calculated to be
$9,480,253.41 which includes subordination and setoff of certain claims if
objections to claims are sustained and $12,053,276.74 if they are not sustained.
Under the Plan if objections to claims are sustained, unsecured creditors will
receive cash equal to 27 percent of their claims and stock split on a pro rata
basis with the Class 12 creditor equal to another 38 percent of their claims. If
the objections to claims are not sustained, the unsecured creditors will receive
cash equal to 21 percent of their claims and stock split on a pro rata basis
with the Class 12 creditor equal to another 31 percent of their claim. Atlas
projects that in a Chapter 7 liquidation the claims will be increased by the
following: $4,500,000 estimated tort claims which under Plan pursue only the
insurance recoveries; $2,250,000 of the claim of Roy Shipes stipulated under the
Plan to be subordinated and to share only in the distribution of stock; and the
$500,000 deficiency claim of ACSTAR. Thus the unsecured claims are estimated in
a Chapter 7 to be $7,250,000 higher than under the Plan or $16,730,253 if
objections to claims are sustained and $19,303,277 if they are not. In a
liquidation unsecured creditors, if objections to claims are sustained, will
receive $0.15 and $0.13 if they are not. The Atlas Plan is in the best interests
of creditors as they receive more than they would under a Chapter 7 liquidation.
B. LIQUIDATION ANALYSIS OF APMI
Value as Scheduled Liquidation Value
- --------------------------------------------------------------------------------
Gold Bar Property 0/52/ 0.00/53/
- --------------------------------------------------------------------------------
Grassy Mountain 1,950,000/54/ 270,000/55/
- --------------------------------------------------------------------------------
Security Deposits 0/56/ 0.00/57/
- --------------------------------------------------------------------------------
- -----------------
/52/ Assumes that the interests of APMI at Gold Bar are transferred
for the assumption of the environmental liabilities associated with the
exploration land of $275,000 and therefore that APMI does not recover any funds
from its interests at Gold Bar.
/53/ Assumes in a liquidation that the Gold Bar property is seized
by the holders of lien claims and environmental liabilities and therefore there
is no value for the estate.
/54/ Assumes that the Grassy Mountain Property is held until gold
prices increase and is sold in 2001 for 2,000,000 and is sold under the
agreement with Geographe with a $50,000 success fee.
/55/ Assumes Grassy Mountain liquidated for $300,000 less costs of
sale of 10% netting $270,000 which is the price the Debtor estimates can be
obtained for the property in the current market. Assumes that the Trustee sells
the property under the Agreement with Geographe which provides for a success fee
of a minimum of $50,000 but not to exceed 10% of the price received.
/56/ Total security deposits including deposit for copier, and
deposits with the Bureau of Land Management. Assumes value applied to
obligations and no value for distribution to creditors.
/57/ Valued at 0. In a liquidation it is assumed that the deposits
will be offset against obligations of the Debtor.
-104-
<PAGE>
Receivable from AGMI 940,151.85/58/ 62,274.40/59/
- --------------------------------------------------------------------------------
Equity interest in AGMI 0.00/60/ 0.00/61/
- --------------------------------------------------------------------------------
2,890,151.85 332,274.40
TOTAL VALUE
- --------------------------------------------------------------------------------
Projected distribution Chapter 11 Plan Chapter 7
Liquidation
- --------------------------------------------------------------------------------
APMI Assets 2,890,152 332,274
- --------------------------------------------------------------------------------
Less Administrative Expenses owed Atlas 206,985 206,985
(08/31/99)
- --------------------------------------------------------------------------------
Less Costs of Administering Estate 0/62/ $30,000/63/
- --------------------------------------------------------------------------------
Less Chapter 7 Trustee Fees 0.00 $19,814/64/
- --------------------------------------------------------------------------------
Net Value to Estate 2,683,167 75,475
- --------------------------------------------------------------------------------
Value for Unsecured Creditors 2,683,167 75,475
- --------------------------------------------------------------------------------
Percentage Distribution 11% Less than 1
percent
- --------------------------------------------------------------------------------
Under the Plan it is presumed that the claim of the Class 25(b) creditor is
reduced for the distributions estimated under the AGMI Plan to $440,000. The
claims of the Class 25(b), 27 and 28 claims total $23,229,750 if objections to
claims are sustained and $25,234,650 if they are not sustained. Under the Plan,
the claims receive their pro rata share of the distributions or $0.11 per dollar
if objections are sustained and $0.10 per dollar if they are not sustained.
Under a Chapter
- ---------------------
/58/ The claim is calculated based upon the claim of APMI against
AGMI after setoff in the amount of $7,679,039 taking its pro rata share
(approximately 85% of the distributions available to unsecured creditors under
the AGMI Plan. If the disputed claims in the AGMI estate are allowed, APMI's
share will be 69% of the distributions available or $763,182.09.
/59/ Assumes APMI's claim is reduced under the inter-company setoff
on a dollar for dollar basis and receives its pro rata share 85% of the
distribution allowed to unsecured creditors of AGMI. If the disputed claims in
AGMI's case are allowed, the share will be 69% or $50,552.16
/60/ The interests are voided under the Plan.
/61/ The assets of AGMI are insufficient to pay its obligations in
full, thus there is no value to the stock.
/62/ Assumes that the costs of filing consolidated tax returns and
administrative expenses are paid by Atlas.
/63/ Based upon estimated costs of obtaining appraisal of property
of $10,000, estimated costs of preparing tax returns of $10,000 and estimated
legal fees and expenses for estate of $10,000 with consideration of time
necessary to review the facts and law and to bring counsel up to speed on the
transactions.
/64/ Assumes trustee's fees paid at maximums set forth in Section
326(a) of the Code.
-105-
<PAGE>
7 liquidation, it is assumed that ACSTAR's unsecured claim will be allowed in
the amount of $500,000 thus the total unsecured claims will be $23,289,750 if
objections to claims are sustained and $25,294,650 if they are not sustained. In
a Chapter 7 the unsecured creditors will receive less than $.01 per dollar. The
APMI Plan is in the best interests of creditors as they will receive more in
under the APMI Plan than they would in a liquidation.
C. LIQUIDATION ANALYSIS OF AGMI
Liquidation
Value under Plan Value
- --------------------------------------------------------------------------------
Gold Bar Property $950,000/65/ $225,000/66/
- --------------------------------------------------------------------------------
Eureka Trailer Park $93,000/67/ 74,400/68/
- --------------------------------------------------------------------------------
Cash & short term investments (as of 6/30/99) $72,654/69/ $72,654
- --------------------------------------------------------------------------------
Restricted Cash - Norwest C.D. 0/70/ 0
- --------------------------------------------------------------------------------
Security Deposits $0/71/ 0.00/72/
- --------------------------------------------------------------------------------
- ---------------
/65/ AGMI projects that its interest in Gold Bar will be sold for
$1,000,000. Assumes that the property is sold under the agreement with Geographe
with the minimum success fee of $50,000 applicable netting $930,000 for the
estate with the purchaser assuming the environmental reclamation liabilities.
/66/ In a liquidation, AGMI believes that the property can be sold
for $250,000 less costs of sale estimated at 50,000 for a net recovery of
$200,000. Even in a liquidation it is assumed that the Trustee will have to
retain the services of Geographe or another broker with experience in selling
properties of this nature. It is assumed that the Trustee will continue the
Geographe contract and will pay the success fee of which under contract does not
exceed 10% of funds received.
/67/ AGMI believes that the trailer park can be sold for $100,000
less costs of sale. Projections assume that the trailer park is sold through a
real estate broker who charges a customary fee of 7% for a net recovery to the
estate of $93,000.
/68/ AGMI estimates that in a liquidation that the trailer park will
be sold at a 20% discount or at $80,000 less a brokers commission of 7 percent.
/69/ The proceeds of the sale of the Thickener equipment which is
held in escrow pending resolution of the outstanding lien issues with Eureka
County and Gerald E. Davis.
/70/ Pledged as security for the Letter of Credit issued by Norwest
to secure the bonds issued by U.S. Fire. The Letter of Credit has been called
and the Certificate of Deposit offset against the liability.
/71/ AGMI has security deposits of $5,150. AGMI anticipates that they
will be retained by the lessors and therefore there is no value for the estate
under the Plan.
/72/ In a liquidation AGMI projects that the security deposits will
be applied to outstanding claims.
-106-
<PAGE>
- --------------------------------------------------------------------------------
Receivable from Atlas 0.00/73/ 0.00/74/
- --------------------------------------------------------------------------------
Mount Wheeler Power Capital Rebate 209,969/75/ 0/76/
- --------------------------------------------------------------------------------
TOTAL VALUE $1,325,623 372,054
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Projected distribution Chapter 11 Plan Chapter 7
Liquidation
- --------------------------------------------------------------------------------
Gold Bar Assets 1,325,623/77/ 372,054
- --------------------------------------------------------------------------------
Less Tax Liens estimated at: 0/78/ 0/79/
- --------------------------------------------------------------------------------
Less Administrative Expenses 146,923 146,923
owed Atlas
(08/31/99)
- --------------------------------------------------------------------------------
Less Costs of Administering Estate 10,000.00/80/ $70,000/81/
- --------------------------------------------------------------------------------
Less lien of Gerald Davis 60,000 60,000
- --------------------------------------------------------------------------------
Less Chapter 7 Trustee Fees 0.00 $21,867/82/
- --------------------------------------------------------------------------------
- --------------------
/73/ Valued at $0. Plan provides that claim is offset against
intercompany receivables.
/74/ Assumes that trustees reach an agreement in the liquidations
whereby the claim against Atlas is offset by a dollar for dollar reduction in
the claim owing to APMI.
/75/ Non-assignable Capital Rebates payable from a co-op from the
construction of a power line payable commencing fifteen years after construction
of the power line . Atlas believes that payments under rebate commence in the
year 2002. Valued at a fifteen percent discount rate. Valued as of January 1,
1999. AGMI has valued the rebates at a discounted cash value.
/76/ The Mount Wheeler power rebate are non-assignable and non
transferrable. AGMI does not believe that a Chapter 7 Trustee could sell the
rebates that they could only be acquired through acquisition of AGMI and AGMI
does not believe that a purchaser would be willing to acquire the liabilties in
exchange for rights under the rebate. AGMI does not believe that a Chapter 7
Trustee would leave the estate open for a long enough period to realize the
rebates and therefore has valued them at $0.
/77/ Includes cash from sale of Thickener equipment
/78/ Assumes tax liability determined to be $0 in Section 505
action.
/79/ Assumes Chapter 7 Trustee will pursue Section 505 action and
successfully determines that taxes are $0. If the Section 505 action is not
asserted, tax liens could be asserted against the estate up to $236,697.62.
/80/ Assumes that the costs of filing consolidated tax returns are
paid by Atlas. The $10,000 includes estimated costs for counsel to bring Section
505 action given familiarity with facts of case.
/81/ Based upon estimated costs of obtaining appraisal of property
of $10,000 for Section 505 Action since Debtor's principals will not be
available to testify to value, estimated costs of preparing tax returns of
$10,000 and estimated legal fees and expenses for estate of $50,000 with
consideration of time necessary to review the facts and law and to bring counsel
up to speed on the transactions.
/82/ Assumes trustee's fees paid at maximums set forth in Section
326(a) of the Code.
-107-
<PAGE>
Net Value to Estate from Gold Bar 1,108,700 73,264
- --------------------------------------------------------------------------------
Less payment to administrative convenience 2,638.90
class
- --------------------------------------------------------------------------------
Value for Unsecured Creditors 1,106,061 73,264
- --------------------------------------------------------------------------------
Percentage Distribution 12% less than 1%
- --------------------------------------------------------------------------------
Under the Plan, the claims of unsecured creditors are reduced. First, the
claim of APMI is reduced from $11,867,299 to $7,379,039. The projections assume
that the disputed claims are not allowed, that the environmental liabilities of
the Bureau of Land Management are fully secured. The unsecured claims under the
Plan including the deficiency claim of the Class 47 and 45(b) claims total
$1,250,000 which share on a pro rata basis with the APMI claim. Under the Plan,
the distributions are based upon the pro rata share of claims totaling
$8,629,039 or $0.12 per dollar. If the disputed claims are allowed, the
distributions would be based upon the pro rata share of claims totaling
$10,633,939 or $.10 per dollar. In a liquidation, the Class 48 claims will be
included in the distribution. Thus the unsecured claims in a Chapter 7 will
total $8,631,677.90 or will provide for less than a cent per dollar
distribution.
Under the Plan, the creditors will receive stock in the corporation and
will receive their pro rata distribution of the value of the assets to be sold
on a going concern basis. The Debtor projects that under the Plan distributions
will be made to the creditors totaling at least 12 percent of their claims. The
AGMI Plan is in the bests interests of creditors as they will receive more in
under the AGMI Plan than they would in a liquidation.
XI. RISK FACTORS
Bankruptcy
- ----------
Atlas, AGMI and APMI are seeking to reorganize their debts under Chapter 11
protection from their creditors. There are no guarantees that Atlas or its
subsidiaries will succeed with their efforts to reorganize and emerge from
Chapter 11.
Prices
- ------
Atlas' profitability has and continues to be significantly affected by
metal prices. These prices may fluctuate widely and are affected by numerous
factors beyond its control, including global and regional demand, production
costs, transportation and smelting charges, political and economic conditions,
the strength of the United States dollar and exchange rates.
Gold, lead, zinc and silver are products that can be easily sold on
numerous markets throughout the world. It is not difficult to ascertain the
market price for these metals at any particular time, and these metals can be
sold to a large number of refiners or metal dealers on a
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<PAGE>
competitive basis. Atlas and its subsidiaries normally sell their metal
production through major dealers and in some cases may use hedging programs.
The ability of AGMI and APMI to sell Gold Bar and/or Grassy Mountain may
also be significantly affected by declining metal prices.
Environmental Issues
- --------------------
Atlas and its subsidiaries are required to comply with various federal,
state and local regulations relating to environmental matters at their
properties. Atlas, AGMI and APMI are required to obtain permits from various
governmental agencies in order to mine and mill metals. Atlas and its
subsidiaries have obtained all of the necessary permits relating to their on-
going operations. The Companies cannot anticipate whether increasing costs of
environmental compliance for their properties will have a material adverse
impact on planned operations or competitive position.
Competition
- -----------
Atlas and its subsidiaries compete with substantially larger companies in
the acquisition of properties and the production and sale of metals. Atlas does
not believe that it or any other competitor is a material factor in these
markets, and the price it receives for its production depends almost entirely
upon market conditions over which it has no control. Atlas believes that it can
promptly sell at current market prices all of the metals that it can produce.
Liquidity
- ---------
Atlas expects that it will continue to incur losses in the near future, and
that its return to profitability will depend on, among other things, its ability
to reorganize under Chapter 11 and to finance additional development of its
Bolivian operations. Atlas continues to generate limited cash flow at its
Bolivian mines. The amount of cash flow available for acquisitions,
investments, exploration and development is very limited. As a result, Atlas is
carefully monitoring its discretionary spending while it seeks financing
alternatives. There is no guarantee that Atlas will be able to obtain the
necessary financing to enable it to return to profitability.
Refinancing
- -----------
The projections for the Plan are premised upon an assumption that Atlas and
Arisur will be able to renegotiate the CAF Loan and that Arisur will be able to
obtain financing to fund necessary developments. CAF has agreed to the terms of
a restructure which should be approved by Order of the Court by or near
September 13, 1999. There are risks that Arisur may not be able to obtain the
necessary funding for further development.
Mining and Processing
- ---------------------
The Debtors' business operations are subject to risks and hazards inherent
in the mining industry, including but not limited to unanticipated variations in
grade and other geological
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<PAGE>
problems, water conditions, surface or underground conditions, metallurgical and
other processing problems, mechanical equipment performance problems, the
unavailability of materials and equipment, accidents, labor force and
transportation disruptions, unanticipated transportation costs and weather
conditions, any of which can materially and adversely affect, among other
things, the development of properties, production quantities and rates, costs
and expenditures and production commencement dates.
Risk of International Operations
- --------------------------------
Many of the mineral rights and interests of the Debtors are subject to
governmental approvals, licenses and permits. Such approvals, licenses and
permits are, as a practical matter, subject to the discretion of the applicable
governments or governmental officials. No assurance can be given that the
Debtors will be successful in obtaining any or all of the various approvals,
licenses and permits it seeks, that it will obtain them in a timely fashion, or
that it will be able to maintain them in full force and effect without
modification or revocation.
In certain countries in which Atlas has assets and operations, such assets
and operations are subject to various political, economic and other
uncertainties, including, among other things, the risks of war or civil unrest,
expropriation, nationalization, renegotiation or nullification of existing
concessions, licenses, permits, approvals, contracts, taxation policies, foreign
exchange and repatriation restrictions, changing political conditions,
international monetary fluctuations, and currency controls. In addition, in the
event of a dispute arising from foreign operations, Atlas may be subject to the
exclusive jurisdiction of foreign courts or may not be successful in subjecting
foreign persons to the jurisdiction of courts in the United States. Atlas also
may be hindered or prevented from enforcing its rights with respect to a
governmental instrumentality because of the doctrine of sovereign immunity. It
is not possible for Atlas to accurately predict such developments or changes in
law or policy or to what extent any such developments or changes may have a
material adverse effect on Atlas' operations.
Value of Stock
- --------------
The Atlas, AGMI and APMI plans contemplate that stock will be issued to the
unsecured creditors. AGMI and APMI are closely held non-public corporations and
there is no guarantee that creditors receiving stock in these companies will be
able to sell that stock. Further, the stock of AGMI and APMI will be subject to
trading restrictions.
The unsecured creditors of Atlas will receive stock in the Reorganized
Atlas. The value of the stock is dependent upon market values which are subject
to a number of factors including the general economy. There is no guarantee as
to the value of the stock to be issued to the creditors nor to the ability of a
creditor to sell the stock.
Impact of Year 2000
- -------------------
Atlas is in the process of reviewing the potential impact of the year 2000 on
the ability of its and its third party supplier's computer systems to
accurately process information that may be date
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<PAGE>
sensitive. Programs that recognize a date using "00" as the year 1900 rather
than the year 2000 could result in errors or system failures. Atlas' computer
programs consist of canned software which will be upgraded by the manufacturer
at minimal cost to Atlas in order to achieve year 2000 compliance internally.
However, Atlas has not yet completed its assessment of the impact of the year
2000 on third parties upon which it relies and the related impacts to Atlas.
Atlas places significant reliance on third parties for its power supply to
operate its mining and milling operations and also on rail, trucking and
shipping providers for the transport of its product. If this issue is not
adequately addressed by these third party providers in a timely manner, it could
result in a material financial risk to Atlas. Atlas has not adopted a
contingency plan to address possible risks to its systems.
XII. CONSIDERATIONS IN VOTING ON THE CHAPTER 11 PLAN
A. OPERATIONS IN CHAPTER 11
Chapter 11 of the Bankruptcy Code permits the adjustment of secured
debts, unsecured debts and equity interests. A Chapter 11 plan may provide less
than full satisfaction of senior indebtedness and payment of junior indebtedness
or may provide for return to equity owners absent full satisfaction of
indebtedness so long as no impaired class votes against the Plan.
If an impaired class votes against the Plan, this does not necessarily
make implementation of the Plan impossible so long as the Plan is fair and
equitable, that class is afforded certain treatment defined by the Bankruptcy
Code, and at least one impaired class of creditors votes to accept the Plan by a
two-thirds majority in the dollar amount of claims voting and a majority in
number of claims voting. In order to be fair and equitable with respect to the
unsecured creditors, the Plan must either provide the creditor the full value of
his claim or if he does not receive the full value of the claim, no junior class
of creditor or interest holder may receive or retain anything on account of
their claim or interest.
In the event a class is unimpaired, it is automatically deemed to
accept the Plan. A class is unimpaired, in essence, if: (1) its rights after
confirmation are the same as what existed (or would have existed absent
defaults) before the commencement of the Chapter 11 case and any existing
defaults are cured or provided for and the class is reimbursed actual damages;
or (2) the allowed claims of the class are paid in full in cash as though
matured.
If there is no dissenting class, the test for approval by a court of a
Chapter 11 Plan (i.e. confirmation) is whether the Plan is in the best interests
of creditors and is feasible. In simple terms, a Plan is considered by the
Court to be in the best interest on creditors if the Plan will provide a
recovery to the creditors of not less than they would obtain if the Debtor were
liquidated and the proceeds of liquidation were distributed in accordance with
the bankruptcy liquidation (Chapter 7 priorities). In this case, the unsecured
creditors under each Plan will receive more under the respective Plans than what
they would receive in a liquidation and all senior classes of creditors are
either unimpaired or have agreed to different treatment under the respective
Plans.
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<PAGE>
These determinations by the Court will occur at the hearing on
confirmation after each Plan has been accepted by the creditors. The Court's
judgment on these matters does not constitute an expression of the Court's
opinion as to whether the respective Plans are good ones.
B. ALLOWED CLAIMS
While the respective Plans provide for certain payments on the
Effective Date, such payments will only apply to allowed claims. Under the
Bankruptcy Code, a claim may not be paid until it is allowed. A claim will be
allowed in the absence of objection. Once an objection to a claim has been
filed, the claim and objection thereto will be heard by the Court at a regular
evidentiary hearing and allowed in full or in part or disallowed. While the
Debtors bear the principal responsibility for claims objections, any interested
party, including creditors, may file claim objections. Accordingly, payment of
some claims may be delayed until objections to such claims are ultimately
settled.
C. DISCLOSURE REQUIRED BY THE BANKRUPTCY CODE
The Bankruptcy Code requires disclosure of certain facts:
(a) There are no payments made or promises of the kind specified
in Section 1129(a)(4)(A) of the Bankruptcy Code which have not been
disclosed to the Court.
(b) The Reorganized Debtors will remain in control of their
assets after confirmation of the Plans for the purpose of operating the
business of the Reorganized Debtors. The current management of the Debtor
will remain in control of the Reorganized Debtors. The Shareholders of
Atlas holding 1,000 shares or more will retain their interests if the Plan
is confirmed by the consent of the creditors. The Shareholders interests
in AGMI and APMI shall be voided. The Debtors believe that their continued
control is in the best interest of all creditors as described in Section
1129(a)(5) of the Bankruptcy Code.
(c) After the confirmation, the Class 15 Interest Holders of
Atlas will be allowed to retain their interests in the Debtor provided that
the Plan is confirmed with the acceptance of the creditors.
XIII. CONCLUSION
The materials provided in this Disclosure Statement are intended to
assist you in voting on the Plans of Reorganization in an informed fashion.
Since, if the Plans are confirmed, you will be bound by their respective terms,
you are urged to review this material and make such further inquiries as you may
deem appropriate and then cast an informed vote on the Plans.
<PAGE>
Dated this 12 day of September, 1999.
Respectfully submitted,
DEBTORS:
ATLAS CORPORATION
By: /s/ Gregg Shafter
_________________________________________
Gregg Shafter, President
ATLAS GOLD MINING INC.
By: /s/ Gregg Shafter
_________________________________________
Gregg Shafter, President
ATLAS PRECIOUS METALS INC.
By: /s/ Gregg Shafter
_________________________________________
Gregg Shafter, President
SENDER & WASSERMAN, P.C.
By: /s/ Bonnie A. Bell
_________________________________________
Harvey Sender, #7546
John B. Wasserman, #10011
Bonnie A. Bell, #14923
Daniel J. Garfield, #26054
1999 Broadway, Suite 2305
Denver, Colorado 80202
(303) 296-1999 Telephone
(303) 296-7600 Facsimile
E-mail: [email protected]
ATTORNEYS FOR DEBTOR
1. Fees accrued through August 30, 1999 for Sender & Wasserman and Creditors
Committee counsel do not include fees billed for the month of August 1999.
<PAGE>
Exhibit 10.2
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)
________________________________________________________________________________
ATLAS CORPORATION'S SECOND AMENDED PLAN OF REORGANIZATION
________________________________________________________________________________
Atlas Corporation, Debtor in Possession, by and through its counsel Sender
& Wasserman, P.C., proposes this Amended Plan of Reorganization pursuant to 11
U.S.C. (S) 1121(a) (hereinafter referred to as the "Atlas Plan"):
ARTICLE I
DEFINITIONS
-----------
All capitalized terms used herein shall have the respective meanings set
forth below or as otherwise assigned in the Plan. All other terms shall have
the meanings assigned to such terms in the Bankruptcy Code or the Bankruptcy
Rules, or if none, by common usage.
1.1 "ACSTAR" shall mean ACSTAR Insurance Company. ACSTAR has issued bonds
to secure the Moab Cleanup Obligation and the Other Cleanup Obligations of Atlas
and certain of its subsidiaries.
1.2 "ACSTAR Bonds" shall mean Bond #6149 for the Carter Raymond Property,
Bond #6039, #6876 and Bond #6907 for the Grassy Mountain property, Bonds #5659,
#5660 and #5661 for the Gold Bar property, and any other bonds issued by ACSTAR
for the benefit of Atlas, AGMI or APMI, except those bonds defined as the ACSTAR
Moab Bonds, having a collective face amount of $1,790,000 and $5,675,000 (less
approximately $189,000) held in an escrow account for the benefit of ACSTAR with
Colorado State Bank as the escrow agent (the "Escrow Fund"). The
<PAGE>
security for the ACSTAR Bonds and the ACSTAR Moab Bond are cross-collateralized
and represent joint and several obligations of Atlas, APMI and AGMI.
1.3 "ACSTAR Moab Bond" shall mean Bond #5652 for the Moab Utah Site
Cleanup Obligations in the face amount of $6,500,000 and secured by the Escrow
Fund. The security for the ACSTAR Bonds and the ACSTAR Moab Bond is the same
and are cross-collateralized and constitute joint and several obligations of
Atlas, APMI and AGMI.
1.4 "Administrative Expense" shall mean any cost or expense of
administration of Chapter 11 allowed under 11 U.S.C. (S) 503(b) of the Code.
1.5 "Affiliate" shall mean any entity affiliated with Atlas pursuant to
11 U.S.C. (S) 101(2).
1.6 "AGMI" shall mean Atlas Gold Mining Inc., a Nevada corporation, the
Chapter 11 Debtor under Case No. 99-10889 DEC.
1.7 "AGMI Plan" shall mean the Plan of Reorganization, as amended
submitted by the Debtor, Atlas Gold Mining Inc.
1.8 "Allowed Claim" shall mean (a) an unsecured claim against Atlas which
is set forth in Atlas' schedules other than an unsecured claim against Atlas
scheduled by Atlas as disputed, contingent or unliquidated; (b) an unsecured
claim against Atlas which has been filed pursuant to 11 U.S.C. (S) 501, and with
respect to which no objection to the allowance thereof has been interposed
within sixty (60) days after the Effective Date, or as to which any objection
has been determined by Final Order; provided however, that interest which would
have accrued on or after September 22, 1998, shall not be a part of any Allowed
Claim. Allowed Claims may include, but are not limited to, claims that arise
from the rejection of executory contracts.
1.9 "Allowed Secured Claim" shall mean an Allowed Claim secured by
property of Atlas.
1.10 "American Reclamation and Dismantling Receivable" or "ARD Claim"
shall mean a claimed receivable of Atlas, for reimbursement of $560,000 filed
with the Department of Energy and not approved to date, representing 56% of the
amount expended by Atlas and reimbursable pursuant to Title X of Pub. L. 102-
486, Title X, (S) 1001, Oct. 24, 1992, 106 Stat. 2946, codified at 42 U.S.C. (S)
2296(a).
1.11 "APMI" shall mean Atlas Precious Metals Inc., a Nevada corporation,
the Chapter 11 Debtor under Case No. 99-10890 SBB.
1.12 "APMI Plan" shall mean the Plan of Reorganization, as amended
submitted by the Debtor, Atlas Precious Metals Inc.
1.13 "Arisur" shall mean Arisur Inc., a Grand Cayman corporation which is
a wholly owned subsidiary of Atlas, and which operates lead, zinc and silver
mines in Bolivia.
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<PAGE>
1.14 "Atlas" shall mean Atlas Corporation, a Delaware corporation, the
Chapter 11 Debtor under Case No. 98-23331 DEC.
1.15 "Atlas Plan" shall mean this Plan of Reorganization, as amended,
submitted by the Debtor, Atlas.
1.16 "Bankruptcy Case" shall mean the Atlas Chapter 11 case pending in
the United States Bankruptcy Court for the District of Colorado.
1.17 "Bankruptcy Code" or "Code" shall mean Title II of the Bankruptcy
Reform Act of 1978, 11 U.S.C. (S)(S) 101, et seq., as amended.
1.18 "Bar Date" shall mean January 15, 1999.
1.19 "CGL Claims" shall mean any and all rights held by Atlas for
recovery from or on account of any comprehensive general liability insurance
policies.
1.20 "Chapter 11" shall mean Chapter 11 of the Code.
1.21 "Claim" shall mean a claim against Atlas as defined in 11 U.S.C.(s)
101(5).
1.22 "Confirmation" shall mean the entry by the Court of an order
confirming the Plan in accordance with Chapter 11 of the Code.
1.23 "Contested Claim" shall mean shall mean any Claim which has been
scheduled by Atlas as disputed, contingent, or unliquidated or any Claim as to
which an objection to the allowance thereof has been or will be filed within
sixty (60) days after the Effective Date regardless of whether the Claim was
scheduled as disputed, contingent or unliquidated by the Debtor. Contested
Claims shall be treated under the provisions of Article X of this Plan until
allowance or disallowance of such claim has been determined by a Final Order.
Contested claims include claims which Atlas believes should be objected to in
whole or in part. Contested claims further include any claims held by
creditors against whom Atlas believes actions may be brought under Sections 544,
547, 548 or 549 of the Bankruptcy Code.
1.24 "Court" shall mean the United States District Court for the District
of Colorado in Bankruptcy.
1.25 "Creditors Committee" shall mean the Official Unsecured Creditors
Committee appointed by the United States Trustee.
1.26 "Gerald E. Davis" or "Davis" shall mean the former officer and
director of Atlas, and former officer of AGMI and APMI who was the defendant in
Adversary Case No. 99-1122 MSK captioned Atlas Corporation, Atlas Gold Mining
Inc., and Atlas Precious Metals, Inc. v. Gerald E. Davis.
-3-
<PAGE>
1.27 "Davis Collateral" shall mean that property described below in which
a security interest was granted in a portion of the Gold Bar property, under the
Settlement Agreement between the Atlas Parties and Davis dated July 9, 1999
approved by Order of the Bankruptcy Court on August 24, 1999:
Section 27, T22 N-R 49 E. MDM, situated in the Roberts Mountain Mining
District, Eureka County, Nevada,
Patented Millsite Claims Mineral Survey # Patent # Acres
- -------------------------- ---------------- ---------- -----
AM 108 5005 27-89-0038 5.0
AM 109 5005 27-89-0038 5.0
AM 115 5005 27-89-0038 5.0
AM 116 5005 27-89-0038 5.0
AM 117 5005 27-89-0038 5.0
together with all of the equipment, books and records related to the above
described property. The property subject to said security interests shall
include the Mill Building, Mill equipment, and other fixtures in the Mill
Building, including the attached refinery located on the patented Millsite
claims described above.
1.28 "Debtor" and "Debtor-in-Possession" shall mean Atlas.
1.29 "Disclosure Statement" shall mean the joint disclosure statement
describing the Atlas Plan, the AGMI Plan and the APMI Plan, approved by the
Court, and distributed to the various classes as provided in 11 U.S.C. (S) 1125.
1.30 "Effective Date"shall mean the first business day following thirty
(30) days after the date the order confirming the Atlas Plan becomes a Final
Order.
1.31 "Escrow Fund" shall mean the $5,675,000 (less approximately $189,000)
held in an escrow account for the benefit of ACSTAR with Colorado State Bank as
the escrow agent.
1.32 "Final Order" shall mean an order or a judgment as to which the time
to appeal or seek review or rehearing has expired. In the event that an appeal
or petition for rehearing is filed, an order or judgment shall be final unless
an order enters granting a stay pending appeal or petition for rehearing.
1.33 "Future Title X Receivables" shall mean those sums which accrue in
the name of Atlas or the Reclamation Trust, subsequent to the Effective Date of
the Atlas Plan from the Department of Energy under the provisions of 42 U.S.C.
2296a.
1.34 "Gold Bar property" shall mean the gold resource, mill facilities and
any other real and personal property located on the gold mining property located
in Eureka County, Nevada commonly referred to as Gold Bar, owned by AGMI and
APMI.
-4-
<PAGE>
1.35 "Grassy Mountain property" shall mean the gold mining project is
located in northern Malheur County, Oregon, approximately 22 miles southwest of
Vale, Oregon, owned by APMI, commonly referred to as Grassy Mountain
1.36 "Insider" means any entity defined in 11 U.S.C. (S) 101(31)(B).
1.37 "Interim Reclamation Trustee" shall mean the person or entity
selected by the NRC to serve as trustee of the Reclamation Trust for a period
not to exceed 180 days after the Effective Date in the event that the NRC and
Utah cannot agree on the choice of the Reclamation Trustee.
1.38 "Late Filed Claims" shall mean any claim filed in the Atlas
Bankruptcy Case after January 15, 1999.
1.39 "Management Compensation Plan" shall mean the compensation plan
formed in accordance with Article XI of this Plan to compensate current key
management and employees for their efforts in reorganizing Atlas and to
facilitate the orderly transition to future management, as may be required.
1.40 "Mill" shall mean the former uranium processing mill which was
dismantled and previously located on the Moab Land.
1.41 "Mill Operations" shall mean the prior operations of the Mill.
1.42 "Moab Cleanup Obligation" shall mean any obligation of Atlas under
the Moab License or under any federal, state or municipal rules, regulations or
statutes to pay for or perform any remediation or cleanup at the Moab Utah Site
or any other location which is currently or in the past been operated or owned
by Atlas.
1.43 "Moab Land" and "Moab Utah Site" shall mean 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.
1.44 "Moab License" shall mean Source Material License SUA-917.
1.45 "Moab Uranium Millsite Transfer Agreement" or "MUMTA" shall mean that
certain Agreement negotiated between Atlas, the Creditors Committee, the NRC,
the State of Utah and ACSTAR approved by Order of the Bankruptcy Court dated
June 22, 1999.
1.46 "Modified License Transfer Order" shall mean that Order entered by
the NRC providing for the transfer of the assets of the Moab Utah Site under the
terms of this Plan and the Moab Uranium Millsite Transfer Agreement.
1.47 "NRC" shall mean the Nuclear Regulatory Commission, an agency of the
federal government having jurisdiction over the Moab Utah Site.
-5-
<PAGE>
1.48 "Other Cleanup Obligations" shall mean any obligation of Atlas, APMI
or AGMI under any federal, state or municipal rules, regulations or statutes to
pay for or perform any remediation or cleanup at any location other than the
Moab Utah Site which is currently or in the past been owned or operated,
including, but not limited to, the Carter Raymond, Gold Bar and Grassy Mountain
properties.
1.49 "Post-petition" shall mean anytime on or subsequent to September 22,
1998.
1.50 "Pre-petition" shall mean anytime prior to September 22, 1998.
1.51 "Pro Rata" shall mean with respect to any claimant, the percentage
which the Allowed Claim of a creditor bears to the sum of all Allowed Claims in
the same class as such Allowed Claim.
1.52 "Reclamation Trust" shall mean the trust to be formed pursuant to
paragraph 4.3 of the Atlas Plan under the guidelines and regulations of the NRC
in compliance with the consent and approval of the NRC.
1.53 "Reclamation Trustee" shall mean the person or entity selected by the
NRC with the agreement of the designated representative of Utah, on or before
the Effective Date.
1.54 "Reorganized Atlas" shall mean the reorganized Atlas under the
confirmed Atlas Plan.
1.55 "Retiree Medical Plan" shall mean that medical plan issued for the
benefit of retirees of Atlas.
1.56 "Shipes Parties" shall mean Harold R. Shipes, Eileen Shipes, Danielle
N. Shipes, John A. McKinney, Lynette R. McKinney, Raymond S. Birch, Rochelle M.
Birch, Herbert E. Dunham, Ana M. Dunham, Alexandra McKinney, Justin S. Birch,
Ashley McKinney, Tyler Birch, H. Edward Dunham, P. Brian Dunham, Rachel A.
Dunham, Elizabeth M. Dunham, Suramco Holdings, Inc. who have agreed to treatment
as Class 10 and Class 12 creditors under the terms of the Settlement Agreement
dated January, 1999, approved by the Bankruptcy Court, which closed on or about
March 25, 1999.
1.57 "Stock Incentive Plan" shall mean that plan which may be established
in accordance with Article XI of this Atlas Plan as a future incentive to future
management pursuant to which management may receive stock or earn stock as a
performance bonus.
1.58 "Title X Receivables for Past Claims" shall mean the sum of $552,000
which accrued to Atlas prior to the Effective Date of the Plan from the
Department of Energy under the provisions of Pub. L. 102-486, Title X, (S)
1001, Oct. 24, 1992, 106 Stat. 2946, codified at 42 U.S.C. (S) 2296(a),
including pre-petition and post petition claims, exclusive of the American
Reclamation and Dismantling Receivable.
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<PAGE>
1.59 "Uranium Tailings Pile" shall mean the tailings pile of approximately
10.5 million tons impounded on the Moab Land.
1.60 "Utah" shall mean the State of Utah.
1.61 "Water Rights" shall mean Atlas' rights to water 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. 6111 and 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; and (d) Water Right Number 99-32 for
.004 cfs from Seep Springs (approx. 4 miles from Fry Canyon).
ARTICLE II
2.1 Claims.
Class 1. Allowed Administrative Expense Claims as defined in 11
U.S.C. (S) 503 of the Code against Atlas. To the extent the Class 4 and/or 5
creditors have or could have asserted administrative expense claims they shall
be treated under Class 4 or 5 respectively of the Atlas Plan. All fees payable
to the U.S. Trustee shall be paid in full as they become due.
Class 2. Unsecured Impaired Claims for Wages against Atlas to the
extent of $4,300 pursuant to 11 U.S.C. (S) 507(a)(3)(A) and (B). Class 2 Wage
Claims shall include claims for unpaid wages, including severance pay or
vacation pay earned but unpaid within ninety (90) days prior to the filing of
the petition.
Class 3. Any allowed unsecured and/or secured priority tax claims of
the Internal Revenue Service, Colorado Department of Revenue and any taxing
authority holding claims under 11 U.S.C. (S)507(a)(8) against Atlas.
Class 4. Impaired claims of NRC and Utah arising from the Mill
Operations and the Cleanup Obligations of Atlas at the Moab Utah Site.
Class 5a. Secured Claims of ACSTAR.
Class 5b. Unsecured and Administrative Claims of ACSTAR.
Class 6. Allowed Secured Claims against Atlas.
Class 7. Unimpaired Claims of Retirees against Atlas for Medical
Benefits.
Class 8. Unimpaired Claims of Holders of Unexpired Leases and
Executory Contracts against Atlas.
-7-
<PAGE>
Class 9. Impaired Personal Injury or Tort Claims against Atlas.
Class 10. Impaired Claims of General Unsecured Creditors of Atlas.
Class 11. Impaired Claims held by AGMI.
Class 12. Impaired Claims of Subordinated Debt.
Class 13 Impaired Claims Held by Gerald E. Davis pursuant to the
terms of the Settlement Agreement dated July 9, 1999.
Class 14. Impaired Claims held by the Internal Revenue Service,
Colorado Department of Revenue and any other taxing authority for penalties not
related to actual pecuniary loss.
Class 15. Impaired interests of Atlas common stockholders holding
less than 1,000 shares.
Class 16. Impaired interests of Atlas common stockholders holding at
least 1,000 shares or more.
Class 17. Impaired interests of any holders of Warrants and Stock
Options issued by Atlas Pre-Petition.
Class 18. Late filed claims.
ARTICLE III
TREATMENT OF CLAIMS NOT IMPAIRED UNDER THE PLAN
-----------------------------------------------
3.1 Class 1. Allowed Administrative Expenses pursuant to 11 U.S.C.
(S)503. Class 1 Allowed Administrative Expenses as defined by 11 U.S.C. (S)503
shall be paid in cash in full on the Effective Date or shall by paid upon such
other terms as may be agreed upon by Atlas and the respective holder of the
claim for Administrative Expenses. All fees payable to the U.S. Trustee program
shall be paid as they become due. Notwithstanding an assertion by the Class 4
or Class 5 claimants that their claims are entitled to priority under Section
503(b) of the Bankruptcy Code, the Class 4 and 5 claims shall be treated under
Class 4 and 5 respectively of this Plan and not as Class 1 Administrative
Expenses.
3.2 Class 6. Allowed Secured Claims. Class 6 is comprised of the Allowed
Secured Claims against Atlas except for the claims of the Class 4 and 5
creditors. The Class 6 claimants and Debtor shall retain all rights, without
modification, under the notes and related security agreements. The Class 6
creditors rights are unimpaired and shall be paid by Reorganized Atlas in full
in accordance with the terms of their respective agreements.
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<PAGE>
In the event that Atlas contests the extent, validity or priority of any
security interest asserted by a Class 6 creditor through the filing of an
adversary proceeding or seeks to void any security interest under 11 U.S.C.
(S)(S)544, 547, 548 or 549, the claim of that creditor shall be treated in
accordance with the provisions of Article X of the Atlas Plan. In the event that
a Final Order enters in favor of the claimant upholding the validity of the
secured claim, the claim shall be unimpaired to the extent allowed. If a Final
Order enters holding that there is no valid security interest or voiding a
security interest, the claim shall be treated as a Class 10 unsecured claim,
unless otherwise ordered by the Court.
3.3 Class 7. Allowed Claims of Retirees for Medical Benefits. Class 7 is
comprised of the allowed claims of Retirees for Medical Benefits as that term is
defined in 11 U.S.C. (S)1114. Atlas or Reorganized Atlas shall fulfill its
obligations under the Retiree Medical Plan in compliance with the provisions of
11 U.S.C. (S)1114. The Class 7 claims are unimpaired.
3.4 Class 8. Executory Contracts and Unexpired Leases. Class 8 is
comprised of the claims held by parties to unexpired leases or executory
contracts. Atlas, prior to the hearing on confirmation, shall file motions to
assume or reject its unexpired leases and executory contracts subject to the
provisions of 11 U.S.C. (S)365 and notice under Fed. R. Bankr. P. 2002 and 6006.
If Atlas moves to assume the unexpired leases and executory contracts, the
claims shall be treated in accordance with the order of the Court granting the
assumption. Any unexpired leases or executory contracts for which a Motion to
Assume has not been filed by Atlas prior to the hearing on confirmation shall be
deemed rejected. Under the terms of the lease agreements, in the event that a
lease is rejected, the equipment or property will be returned to the lessor,
unless Atlas and the lessor otherwise agree. Any Class 8 claimant asserting a
claim for damages arising from rejection of a lease shall file a proof of claim
with the Bankruptcy Court by the later of the Effective Date or thirty days
after entry of the Order granting the Motion to Reject or the claim shall be
forever barred. The claims held by holders of rejected leases or executory
contracts shall be treated as a Class 10 unsecured claim subject to the
limitations of Section 502 of the Code.
ARTICLE IV
TREATMENT OF CLAIMS IMPAIRED UNDER THE PLAN
-------------------------------------------
4.1 Class 2. Unsecured Impaired Claims for Wages to the extent of $4,300
pursuant to 11 U.S.C. (S) 507(a)(3)(A) and (B). Class 2 Wage Claims shall
include claims for unpaid wages, including severance pay or vacation pay earned
but unpaid within ninety (90) days prior to the filing of the petition.
Claimants with allowed wage claims shall receive 100% of the wage portion of
their claims without interest up to a maximum of $4,300.00 per claimant on the
Effective Date. Any allowed wage claims in excess of $4,300 or which were
incurred prior to ninety days before the filing of the petition shall be treated
as a Class 10 unsecured claim.
4.2 Class 3. Allowed Unsecured Tax Claims pursuant to 11 U.S.C. (S)
507(a)(8). Class 3 is comprised of Allowed Unsecured Tax Claims under U.S.C.
(S)507(a)(8) excluding claims for penalties not related to actual pecuniary
loss. The Class 3 claimants shall receive 100% of their secured and unsecured
priority claims in quarterly installments with interest at 8% per annum. The
Class 3 claims shall be paid in full within six years from the date of
assessment. Claims for penalties not related to actual pecuniary loss shall be
treated under Class 14. Payments to the Class 3 claimants shall commence within
fifteen days after the close of the first calendar quarter ending after
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the Effective Date of the Atlas Plan. The Class 3 claimants shall retain their
prepetition liens, if any, on property of the Reorganized Atlas pending payment
in full of the Class 3 claims.
4.3 Class 4. Allowed Claims of the Nuclear Regulatory Commission and the
State of Utah for Reclamation of the Moab Utah Site. Class 4 is comprised of
any and all claims of any kind or nature, whether filed, unfiled or to be
accrued, known or unknown based upon any and all federal, state, municipal or
other governmental units rules, regulations or statutes whether now in existence
or enacted in the future of the NRC and Utah, or any other agency or entity,
whether public or private, with the same or similar claims for the construction,
maintenance, holding, transfer and/or final disposal and containment of the
Uranium Tailings Pile at the Moab Utah Millsite owned by Atlas on the Moab Land,
or in any way related to the Mill, the Mill Operations or the Moab Cleanup
Obligations, subject to a reduced amount under MUMTA. Atlas' Moab Cleanup
Obligations are secured by the ACSTAR Moab Bond in the amount of $6,500,000.
A Reclamation Trust shall be established by the NRC, on or before
confirmation of the Atlas Plan under the regulations of the NRC, with the
concurrence of Atlas and a designated representative of Utah. The Reclamation
Trustee shall be selected by the 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:
(A) 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
(B) An Interim Trustee, selected by NRC, shall be appointed for a period
not to exceed 180 days after the Effective Date; and
(C) NRC and Utah shall continue to negotiate on those areas on which they
cannot reach agreement; and
(D) 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
(E) Atlas shall transfer the monies and assets to the Trust on or before
the Effective Date as are called for under this Plan and the Moab
Uranium Millsite Transfer Agreement, notwithstanding the possibility
that the trust instrument establishing the Trust may be amended after
the date of the Moab Uranium Millsite Transfer Agreement, after the
date of the disclosure statement, or after the Effective Date; and
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 of the NRC as stipulated in a Modified License Transfer Order
and relevant Trust documents according to the authority of the Reclamation
Trustee.
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On the Effective Date of the Atlas Plan, Atlas and ACSTAR as indicated
shall transfer to the Reclamation Trust the following assets (hereinafter the
"Reclamation Trust Assets") in full satisfaction of any and all claims of any
kind and nature, under Class 4:
1. Title X Receivables for past claims; less the $552,000 which was
received by Atlas 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 the Moab Land together with all buildings,
structures, improvements, appurtenances fixtures and easements;
7. ACSTAR shall transfer the sum of $5,250,000 to the Reclamation Trust in
full and complete satisfaction of the obligations under the ACSTAR Moab
Bond 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
Utah Site and ACSTAR's surety bond issued in connection therewith; the form
of said release to be mutually acceptable to NRC and ACSTAR;
8. Shares representing two and one half percent (2.5%) of the common stock
of the Reorganized Atlas shall be issued to the Reclamation Trust.
Except for item 7, all assets shall be transferred in kind, by way of quit
claim deed or similar document, without representations, warranties or
indemnification rights of any kind.
The Class 4 claims shall be satisfied in full by the transfer of the
Reclamation Trust Assets. NRC and the State of Utah shall waive and release any
and all claims against Atlas, the Reorganized Atlas, ACSTAR and their respective
officers, directors, employees, agents and representatives which shall be
represented by a separate release signed by the NRC and Utah. Upon transfer of
the Reclamation Trust Assets to the Reclamation Trust, the Reclamation Trust
shall assume the obligations of Atlas for the Moab Utah Site and the Moab
License, in accordance with the terms of
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an Order Modifying and Transferring Licence to be issued by the NRC, on or
before the confirmation of the Atlas Plan. The Moab 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 Order
Modifying and Transferring Licence. Atlas' obligations shall be limited to
executing any and all documents necessary to effectuate the terms of the Atlas
Plan.
4.4 Class 5a. The Class 5a claims are comprised of the Allowed Secured
Claims of ACSTAR which were secured by certain letters of credit in the
aggregate amount of $5,425,000 plus the Escrow Fund. The ACSTAR Allowed
Secured Claims are based upon the ACSTAR Bonds and ACSTAR Moab Bond in the
aggregate amount of $8,290,000 to secure Moab Cleanup Obligations and Other
Cleanup Obligations. ACSTAR's secured claims against Atlas, AGMI and APMI are
cross collateralized. ACSTAR has drawn on the letter of credit and entitled to
use the proceeds therefrom in order to pay the Class 4 creditors and to
reimburse itself for the actual amount incurred under the ACSTAR Bonds for Other
Cleanup Obligations and its unpaid fees and expenses. Furthermore, any amount
remaining from the Escrow Fund may be used by ACSTAR for the same purposes. To
the extent any funds remain from the Escrow Fund after satisfaction of the Other
Cleanup Obligations secured by the ACSTAR Bonds and any unpaid fees and expenses
ACSTAR has incurred on said Bonds, such funds shall be remitted to the
Reorganized Atlas. ACSTAR shall retain its rights under the escrow agreement.
The foregoing treatment shall constitute satisfaction in full of the Class 5a
Allowed Secured Claim.
Class 5b. The Class 5(b) claim is comprised of the unsecured deficiency
claim which ACSTAR has for the Other Cleanup Obligations which it has to pay,
and unpaid fees and expenses in excess of its Class 5(a) Allowed Secured Claim,
which claim shall not exceed $500,000. Any claim by ACSTAR that its claims are
entitled to treatment as a Class 1 Administrative Expense, under any theory, and
any potential claim against ARISUR, shall be waived and released. For purposes
of voting and feasibility the Class 5(b) claim shall be estimated at $500,000.
ACSTAR's unsecured claims against Atlas, AGMI and APMI shall collectively not
exceed $500,000. The claims shall be allocated among the estates based upon
actual damage, with the claim applied first to AGMI, then to APMI and then to
Atlas. The actual amount of the Class 5(b) monetary claim allowed against Atlas
shall be paid as a Class 10 Allowed Unsecured Claim. On the later of Effective
Date of the Atlas Plan or at such time as the Class 5(b) creditors claim is
actually determined, it shall receive in full satisfaction of its claim a
monetary claims equal to the actual amount expended for Other Cleanup
Obligations, plus fees and expenses, not to exceed $500,000, which shall be
treated as a Class 10 unsecured claim and shares representing two and one-half
percent (2.5%) of the outstanding common stock of the Reorganized Atlas;
provided that such stock shall be held by a mutually acceptable escrow agent
pending determination of ACSTAR's responsibility for the Other Cleanup
Obligations . If Bonds #5659, #5660 and #5661 for the Gold Bar property are
terminated without being called and/or there is no unsecured deficiency, the
Allowed Class 5(b) claim shall be $0 and the shares which are being held in
escrow shall be assigned for distribution pursuant to the Management
Compensation Plan established under Section 11.3.
4.5 Class 9. Allowed Personal Injury or Tort Claims. Class 9 is
comprised of personal injury and tort claims, including any wrongful death
claims or claims resulting from Atlas' operations or based upon the production
of or exposure to asbestos, uranium or any other materials.
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All timely filed Class 9 claims are being defended by insurance defense counsel.
The Allowed Class 9 Claims shall receive the proceeds from insurance coverage,
if any, applicable to the particular claim. Each Allowed Class 9 Claim shall be
deemed to have elected to pursue the insurance coverage, if any, attributable to
its Claim, unless they affirmatively elect otherwise. In the alternative any
Allowed Class 9 Claim may elect at the time of tendering its ballot to be
treated as a Class 10 General Unsecured Claim. Upon receipt of such election,
the Debtor will file a claims estimation proceeding, should such a proceeding be
necessary. Barring such election, each such claim shall be estimated at zero for
voting purpose and shall receive nothing from the Reorganized Atlas. Any late
filed claims shall be barred and shall receive only the proceeds of any
applicable insurance coverage.
4.6 Class 10. Allowed Unsecured Claims. Class 10 is comprised of the
Allowed Unsecured Claims against Atlas, including any claims of the Atlas
Corporation 1978 Retirement Plan (the "Pension Plan"), or its successors and
assigns including the Pension Benefit Guaranty Corporation, for any liability
for funding under the Pension Plan. The Allowed Class 10 creditors shall receive
the following:
(A) All cash held by Atlas sixty days after the Effective Date, net
of the following amounts: (a) up to $800,000 which shall be
retained as working capital; (b) an amount necessary to satisfy
all Class 1 administrative expenses and/or operating expenses
accrued and unpaid as of the Effective Date; and (c) an amount
necessary to satisfy all Class 2 claims. The net cash shall be
distributed on a Pro Rata basis between the Class 10, and 11
creditors, who shall be treated as one class for such purposes.
In the event that the Atlas Plan is confirmed by cramdown,
resulting in a voiding in all of the interests of Class 15 and
Class 16 and a resulting percentage increase in the shares issued
to Class 10, the cash withheld from distribution shall be
increased from $800,000 to $1,000,000;
(B) Seventy-Five percent of any and all net proceeds received by the
Reorganized Atlas, directly or indirectly from APMI and/or AGMI ,
from the sale or disposition of the Gold Bar and/or Grassy
Mountain properties;
(C) Ten percent of the first $1,500,000 recovered by Atlas on account
of its CGL claims and fifty percent of all recoveries in excess
of $1,500,000, net of costs of recovery.
(D) Shares representing sixty-seven and one-half percent (67.5%) of
the common stock to be issued by the Reorganized Atlas. The stock
shall be distributed on a Pro Rata basis between the allowed
Class 10, 11 and 12 creditors for purposes of this distribution
to the Class 10, 11 and 12 Creditors who shall be treated as one
class for such purposes.
4.7 Class 11. Claims Held by AGMI. Class 11 is comprised of the
claims held by AGMI for an inter-company payable for cash advanced to Atlas.
The allowed claim of AGMI
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shall first be offset against AGMI's obligations to APMI which will reduce the
accounts receivable owed by APMI to Atlas. To the extent there is any amount
still owed by Atlas to AGMI, the net Allowed Class 11 Claim shall be treated on
a Pro Rata basis with the Class 10 creditors.
4.8 Class 12. Subordinated Debt Claims of the Shipes Parties. Class 12
is comprised of the subordinated debt claims in the amount of $2,250,000 against
Atlas and an Allowed Unsecured Claim of $580,000 held by the Shipes Parties.
The $580,000 claim shall be treated and paid as a Class 10 Claim. The remaining
Class 12 Claim shall not share in any cash distribution until the Class 10 and
11 Allowed Unsecured Claims have been paid in full. The subordinated Class 12
Debt Claim, however, shall share in the distribution of the stock of the
Reorganized Atlas as set forth in paragraph 4.6(D) on a Pro Rata basis with the
Class 10 and 11 Creditors.
4.9 Class 13. Claim of Gerald E. Davis. Class 13 is comprised of the
claims of Gerald E. Davis which arise under the terms of the Settlement
Agreement dated July 9, 1999 between the parties resolving the disputes and
claims between Gerald E. Davis and Atlas raised in the Chapter 11 proceeding and
in Adversary Case No. 99-1122 MSK captioned Atlas Corporation, Atlas Gold
Mining Inc., and Atlas Precious Metals, Inc. v. Gerald E. Davis. The Class 13
claim against Atlas shall be treated as follows:
(A) Atlas shall pay Davis the sum of $5,000 upon the Effective Date.
(B) Davis shall be paid the sum of $60,000 upon the sale of the Davis
Collateral at Gold Bar as a Class 43 claim under the AGMI Plan,
from the proceeds of any sale (if and when that sale occurs )
after satisfaction of the tax claims of Eureka County and any
administrative expenses. Davis shall be granted a security
interest by Atlas AGMI and APMI in the Davis Collateral at Gold
Bar described herein to the extent of $60,000. The security
interest granted to Davis shall be subordinate to the tax claims
of Eureka County and any administrative expenses.
(C) Davis shall be allowed an unsecured claim against Atlas which
shall be treated and paid as a Class 10 claim in the amount of
$120,246.
4.10 Class 14. Claims Held by the Internal Revenue Service, Colorado
Department of Revenue and Any Other Taxing Authority for Penalties Not Related
to Actual Pecuniary Loss. The Class 13 Claims are comprised of any penalty
claims held by the Internal Revenue Service, the Colorado Department of Revenue
or any other taxing authority which are not related to actual pecuniary loss.
The allowed Class 13 claims shall be treated and paid as Class 10 general
unsecured claims except the Class 13 claims shall not share in any distribution
of stock of the Reorganized Atlas.
4.11 Class 15. Common Stockholders Holding Less than 1,000 Shares. Class
15 is comprised of the interests of common stockholders holding less than 1,000
shares of Atlas stock on the Effective Date. The interests of all Class 15
interest holders shall be voided unless the
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shareholder pays the cost of maintaining the shares of $15 per year per
shareholder. If the annual payment is made the interest holder shall be treated
in accordance with Class 16. Any Class 15 shareholding electing to maintain
shares through payment of the $15 per year shall serve notice upon the Debtor by
the deadline set by the Court for submitting ballots on the Plan. In the event
that the Atlas Plan is confirmed by cramdown, without the acceptance of each
class of creditors, the interests of the Class 15 interest holders shall be
voided and the Class 15 interest holders shall not have the option of retaining
their shares by paying the maintenance fee.
By the Effective Date, Atlas shall serve notice upon those Class 15
Interest Holders who submitted written elections to pay the maintenance fees to
be treated on a pro rata basis with the Class 16 Interest Holders advising them
that the Plan has been confirmed by cramdown or with acceptance of each class.
The notice to the Class 15 interest holders shall advise them that their shares
shall be voided if Atlas does not receive payment of the stock maintenance fee
within thirty days after the date of the notice and on an annual basis
thereafter.
4.12 Class 16. Common Stockholders Holding 1,000 Shares or More. Class
16 is comprised of the common stockholders holding 1,000 shares or more of the
common stock of Atlas on the Effective Date. The Class 16 interest holders
shall retain their shares of common stock which shall be diluted such that the
shares which they collectively own shall constitute fifteen percent (15%) of the
outstanding stock of the Reorganized Atlas on the Effective Date. In the event
that the Plan is confirmed by cramdown, the interests of the Class 16
Stockholders shall be voided, and the stock interest shall be held by the
Reorganized Atlas as authorized but unissued shares.
4.13 Class 17. Warrants and Stock Options. Class 17 is comprised of
any and all outstanding warrants of Atlas Corporation and any and all
outstanding stock options. All such warrants and stock options shall be voided
as of the Effective Date.
4.14 Class 18. Late Filed Claims. Class 18 is comprised of all late
filed claims against Atlas. The Class 18 claims shall be disallowed and shall
receive no distribution under the Atlas Plan.
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ARTICLE V
DEFAULT AND PLAN MODIFICATION
-----------------------------
5.1 In the event of any default by the Reorganized Atlas of any payment to
any class of claimants arising under the terms of the Atlas Plan, the
Reorganized Atlas shall have thirty (30) days within which to cure any default
in payments due under this Plan after the date of issuance of written notice
from any claim holder. Written notice shall be provided to the Reorganized Atlas
and to Debtor's counsel. The notice to Debtor's counsel shall be served upon
Sender & Wasserman, P.C., 1999 Broadway, Suite 2305, Denver, Colorado 80202,
unless written notice of substitution of legal counsel is served upon the claim
holder at least fifteen (15) days prior to the date notice is sent.
5.2 In the event that the Reorganized Atlas fails to cure any default in
the requirements to make payment under the Plan, within forty-five days from the
date that written notice is sent in compliance with paragraph 5.1, the
Reorganized Atlas shall be in default under the terms of the Plan.
5.3 At any time after Confirmation of the Plan but before substantial
consummation of the Plan, the Plan may be modified upon the request of the
Reorganized Atlas, after notice and a hearing, only to the extent allowed by 11
U.S.C. (S) 1127.
ARTICLE VI
MEANS FOR THE IMPLEMENTATION AND EXECUTION OF THE PLAN
------------------------------------------------------
6.1 On or about the Effective Date, all assets of Atlas shall be
transferred to the Reorganized Atlas free and clear of all liens, claims, and
interests of creditors, equity holders, and other parties in interest, except as
otherwise provided herein with respect to the assets to be transferred to the
Reclamation Trust in payment of the Class 4 Claims. Specifically, the assets
shall be transferred subject to the liens held by the Class 5, 6 and 13 secured
creditors and any Class 2 creditor with perfected liens. The Reorganized Atlas
shall not, except as otherwise provided in this Plan, be liable to repay any
debts which accrued prior to the Confirmation Date. Except as provided in this
Atlas Plan, on the Confirmation Date Atlas shall be granted a discharge under 11
U.S.C. (S) 1141.
6.2 On the Effective Date, Atlas shall begin implementing its Plan of
Reorganization pursuant to the terms for each class of claimants set forth above
under Articles III and IV above. All payments under the Atlas Plan shall come
from the cash held by the Reorganized Atlas sixty days after the Effective Date
less amounts withheld pursuant to paragraph 4.6, from the sale of Cornerstone,
the Old Title X Receivables, of $552,000 paid prior to the Effective Date, and
from amounts collected post confirmation including 75% of the amounts received
directly or indirectly from AGMI and APMI from the sale of the Gold Bar and
Grassy Mountain properties and 10 percent of the CGL recoveries up to net
recoveries (after costs of collection) of $1,500,000 and fifty percent of the
net recoveries thereafter. On the due date for payments set forth in Articles
III and IV above, the Reorganized Atlas shall distribute the required Pro Rata
amount to each claimant holding an
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Allowed Secured or Unsecured Claim and escrow the same Pro Rata amount to
creditors holding disputed claims as provided in Article X herein.
6.3 By the Effective Date, Atlas shall serve notice upon the known Class
16 Interest Holders and those Class 15 Interest Holders electing to pay the
annual costs of maintaining the shares advising them that the Plan of
Reorganization has been confirmed and whether the Plan was confirmed by cramdown
or with the acceptance of each class. The notice to Class 15 Interest Holders
shall advise them that their shares shall be voided if Atlas does not receive
payment of the stock maintenance fee within thirty days after the date of the
notice and on an annual basis thereafter.
6.4 Distributions of the cash required under paragraph 4.6(A) of the Plan
shall be mailed by the 60th day after the Effective Date. Distributions of the
funds required under paragraphs 4.6(B) and 4.6(C) shall be mailed within fifteen
days after the close of the quarter in which the funds were received.
6.5 The Reorganized Atlas may pursue any claims or recovery actions held
by Atlas, including but not limited to recovery under 11 U.S.C. (S)(S)544, 547,
548 and 549. The Reorganized Atlas may abandon any claim Atlas has against any
third party if it determines that the claim is burdensome or of inconsequential
value and benefit. The Reorganized Atlas is authorized to employ counsel to
represent Atlas in the litigation or any cause of action or claims held by
Atlas.
6.6 All funds held by the Reorganized Atlas for distribution under the
Atlas Plan shall be held in accounts which meet the insurance and guaranty
requirements 11 U.S.C. (S)345(b).
6.7 Following the Effective Date, the Reorganized Atlas may compromise
objections to Claims or causes of action referred to in this Atlas Plan without
notice and hearing for claims or causes of action asserted in the original
amount of $25,000 or less. Settlements or compromises of any claims or causes of
action asserted in the amount of $25,000 or more shall be subject to notice and
an opportunity for hearing under the provisions after notice in compliance with
the Local Rules of Bankruptcy Procedure.
6.8 After the Effective Date, the Reorganized Atlas exercising its
business judgment may sell, operate or abandon any of its assets.
6.9 Atlas shall receive a discharge to the extent permitted by 11 U.S.C.
(S) 1141 and Atlas shall be entitled to seek injunctive relief from the Court,
if necessary, to enforce any and all provisions of the Plan.
6.10 If the Atlas Plan is confirmed with the acceptance of the classes,
the Class 16 Interest Holders and the Class 15 Interest Holders who have paid
the annual maintenance fee will retain their interests and new stock shall be
issued by the Reorganized Atlas to the Class 4, 5, 10, 11, and 12 creditors and
pursuant to the Management Compensation Plan within 90 days after the Effective
Date. In determining the Pro Rata share to be distributed to Contested Claims
under Article X, the shares shall be reserved as if the Contested Claims were
allowed in full and held by the Reorganized
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Atlas pending resolution of the dispute. If Atlas' objections to the claims are
sustained by Final Order, the shares shall not be issued.
ARTICLE VII
CRAM DOWN
---------
7.1 If all of the applicable requirements for confirmation of the Atlas
Plan are met as set forth in 11 U.S.C. (S) 1129(a)(1)-(11) except Subparagraph
(8), Atlas (subject to the acceptance of the Atlas Plan by at least one class
which is impaired) hereby requests the Court confirm the Atlas Plan pursuant to
11 U.S.C. (S) 1129(b), notwithstanding the requirements of Subparagraph (8), as
the Atlas Plan is fair and equitable and does not discriminate unfairly with
respect to any dissenting, impaired class.
ARTICLE VIII
GENERAL PROVISIONS
------------------
8.1 The Reorganized Atlas shall be vested with ownership to all property
of Atlas upon the Effective Date except for those assets to be transferred to
the Reclamation Trust.
8.2 The payment of Allowed Claims, Allowed Administrative Claims and
Allowed Secured Claims shall be in exchange for all claims against Atlas and the
Reorganized Atlas and shall constitute full settlement, release, discharge, and
satisfaction of all such claims against Atlas and the Reorganized Atlas.
8.3 Nothing herein contained shall prevent Atlas from taking any action as
may be necessary to the enforcement of any cause of action which may exist on
behalf of Atlas and which may not have been enforced or prosecuted by Atlas
prior to the Effective Date.
8.4 Atlas reserves the right to modify the Plan prior to the Confirmation,
and thereafter to modify the Plan in accordance with 11 U.S.C. (S) 1127(b) and
(P) 5.2 hereunder.
8.5 Atlas reserves the right to reopen the Chapter 11 case after
Confirmation and dismissal for the purposes set forth in Article XII.
8.6 To the extent that the provisions of the Disclosure Statement are
inconsistent with the provisions of this Plan, the provisions of this Plan shall
control.
8.7 Atlas' obligation to pay the quarterly fees owing to the Office of the
United States Trustee pursuant to 28 U.S.C. (S)1930(a)(6) is a continuing
obligation which does not terminate until the Bankruptcy Case is closed.
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ARTICLE IX
PROVISION FOR ASSUMPTION OR REJECTION OF EXECUTORY CONTRACTS
------------------------------------------------------------
9.1 All unexpired leases and executory contracts between Atlas and any
other party which have not prior to the Effective Date of the Atlas Plan been
affirmatively assumed by Atlas by the filing of an appropriate motion are hereby
rejected.
ARTICLE X
PROVISION AS TO CONTESTED CLAIMS
--------------------------------
10.1 Atlas or the Reorganized Atlas may, at any time within ninety (90)
days after the Effective Date file an objection to any claim which in its
opinion should be objected to as improper, in whole or in part, regardless of
whether the claim was scheduled as disputed, contingent or unliquidated. Atlas
may further designate claims held by creditors against whom they believe actions
may be brought under Sections 544, 547, 548 or 549 of the Bankruptcy Code as
Contested Claims by sending notice in writing to the Claimant within sixty (60)
days after the Effective Date.
Upon the filing of such objection or service of said written notice, such
claim shall be considered a Contested Claim, and any cash or other instruments
or property otherwise distributable to such creditor under this Atlas Plan shall
be held by Atlas in escrow until final disposition of the objection to the claim
either by settlement or entry of a Final Order. If the claim is only contested
in part, payment shall be made to the claimant on the uncontested portion under
the provisions of Article IV and the balance shall be treated as a Contested
Claim under the provisions of Article X. If the objection is overruled or
denied, in whole or in part, or the claim is allowed by stipulation of Atlas and
the claimant, such claimant shall receive the amount of cash or property
provided in this Atlas Plan to the extent of the amount of the claim finally
allowed, including back installments.
10.2 From and after the Effective Date, the Reorganized Atlas shall
reserve and hold for the benefit of each holder of a Contested Claim cash in an
amount equal to the Pro Rata payments which would have been made to the holder
of such contested claim if it were an Allowed Claim in an amount equal to the
lesser of: (i) the amount of the Contested Claim or (ii) the amount in which
the Contested Claim shall be estimated by the Bankruptcy Court pursuant to (S)
502 of the Bankruptcy Code for purposes of allowance, which amount shall
constitute and represent the maximum amount in which such claim may ultimately
become an Allowed Claim. No payments or distributions shall be made with
respect to all or any portion of any Contested Claim pending the entire
resolution thereof by Final Order.
ARTICLE XI
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS OF DEBTOR
-----------------------------------------------------------
AND STOCK INCENTIVE PLAN
------------------------
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11.1 As may be required, the Articles and Bylaws of Atlas shall be amended
on or before the Effective Date to the extent necessary to effectuate the
provisions of the Atlas Plan, including but not limited to, reincorporating the
Reorganized Atlas under the laws of the State of Colorado, reverse splitting the
common stock such that for every thirty shares of outstanding common stock shall
be converted to one share of common stock in the Reorganized Atlas, maintaining
its authorized common stock at 100,000,000 shares and issuing new common stock
in compliance with the provisions of this Atlas Plan. In consummating the
reverse split of the common stock the following rules shall apply: (a) no
fractional shares shall be issued; (b) no compensation shall be paid for
fractional shares; and (c) to the extent an interest holder owns less than 30
shares on the Effective Date, they shall receive, subject to compliance with
Section 4.10 and the treatment of Class 15, one share of the Reorganized Atlas.
All percentages of stock referred to in this Atlas Plan shall refer to the
percentage of issued and outstanding shares as of the Effective Date. In
addition, the certificate of incorporation shall be amended to include a
provision prohibiting the issuance of non-voting equity securities.
11.2 A Stock Incentive Plan shall be established pursuant to which the
employees, management or officers of Reorganized Atlas may acquire stock based
upon criteria established in the Stock Incentive Plan, to be approved by the
Board of Directors of the Reorganized Atlas. Any stock used for the Stock
Incentive Plan shall be derived from the unissued shares of the Reorganized
Atlas and not from any shares to be issued to any other party in interest.
11.3 A Management Compensation Plan shall be implemented on the Effective
Date to compensate current management and key employees for reorganizing Atlas
and to ensure stability and an orderly transition of management as may be
required. The Reorganized Atlas shall issue shares of stock in the Reorganized
Atlas or options to purchase shares of stock in the Reorganized Atlas up to a
total of 12.5% of the total shares in the Reorganized Atlas (plus any additional
shares transferred from the Class 5(b) creditor) on the tenth business day of
the year 2000 as follows:
Gregg Shafter 2.5%
Richard E. Blubaugh 2.5% plus 1/2 of any shares from the Class 5(b)
claim
James Jensen 2.5% plus 1/4 of any shares from the Class 5(b) claim
Mario Caron 1.25%
Greg French 1.25% plus 1/4 of any shares from the Class 5(b) claim
Dale Edwards 1.00%
Janet Wilson 0.5%
Don Canepa 1.00%
The individual recipients listed above shall elect to receive the stock or
options by serving written notice upon the Debtor by the Effective Date of the
Plan. The option to purchase shall be exercisable over a period of five years at
an exercise price equal to $.01 over the market price on the date of issue.
In addition, Richard E. Blubaugh shall receive a two year consulting
contract with a retainer of $30,000 per year payable in six equal monthly
installments due on the 15th day of the month after termination of his regular
employment. The payments to Richard Blubaugh under the
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<PAGE>
consulting contract for the second year shall be made only if he fulfills his
consulting contract for the first year. Mr. Blubaugh shall perform services such
that the number of hours of services performed, billed at fees customarily
charged by consultants with his experience, shall equal at least the value of
the retainer paid.
11.4 Board of Directors and Annual Shareholders Meeting.
The current Board of Directors shall serve until the next annual or special
meeting of shareholders, called in accordance with the Bylaws, provided that the
Official Creditors Committee shall on the Effective Date appoint new members to
the Board of Directors representing a minimum of two (2) new members up to a
maximum number of new members representing 50% of the Board. The Bylaws shall
be amended to provide that the Board of Directors shall consist of a minium of 4
and a maximum of 8 members. At the annual or special meeting, the shareholders
shall elect a new Board of Directors.
ARTICLE XII
RETENTION OF JURISDICTION
-------------------------
The Court shall retain jurisdiction over this Chapter 11 case and related
core and non-core proceedings, for the following purposes:
12.1 To hear and determine any and all objections to the allowance of
claims or interests.
12.2 To determine any and all applications for allowances of compensation
and reimbursement of expenses and any other fees and expenses authorized to be
paid or reimbursed under the Code or the Plan.
12.3 To hear and determine any and all pending applications for the
rejection or assumption, or for the assumption and assignment, as the case may
be, of executory contracts or unexpired leases to which Atlas is party, and to
hear and determine any and all claims arising therefrom.
12.4 To hear and determine any and all applications, adversary
proceedings, and contested or litigated matters that may be pending on the
Effective Date or that Atlas may bring subsequent to the Effective Date or to
which Atlas may be made a party.
12.5 To consider any modifications of the Atlas Plan, to remedy any defect
or omission or reconcile any inconsistency in the Atlas Plan or in the orders of
the Bankruptcy Court, including the Order of Confirmation.
12.6 To hear and determine any request under Fed. R. Bankr. P. 2004 to
allow Atlas to complete any pending investigation as to potential assets or
liabilities.
12.7 To hear and determine all controversies, suits, and disputes that may
arise in connection with the interpretation, enforcement, or consummation of the
Atlas Plan, including any disputes between the plan proponents.
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<PAGE>
12.8 To consider and act on the compromise and settlement of any claim or
cause of action by or against Atlas.
12.9 To issue orders in aid of execution of the Atlas Plan as
contemplated by (S) 1142 of the Code.
12.10 To determine such other matters as may be set forth in the Order of
Confirmation or which may arise in connection with the Plan or the Order of
Confirmation.
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<PAGE>
Dated this 16th day of September, 1999.
Respectfully submitted,
DEBTORS:
ATLAS CORPORATION
By: /s/ Gregg Shafter
-----------------------------------------
Gregg Shafter, President
SENDER & WASSERMAN, P.C.
By: /s/ (illegible signature)
-----------------------------------------
Harvey Sender, #7546
John B. Wasserman, #10011
Bonnie A. Bell, #14923
Daniel J. Garfield, #26054
1999 Broadway, Suite 2305
Denver, Colorado 80202
(303) 296-1999 Telephone
(303) 296-7600 Facsimile
E-mail: [email protected]
ATTORNEYS FOR DEBTOR
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Exhibit 10.3
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)
________________________________________________________________________________
AMENDED PLAN OF REORGANIZATION OF ATLAS PRECIOUS METALS INC.
________________________________________________________________________________
Atlas Precious Metals Inc., Debtor in Possession, ("APMI") by and through
its counsel Sender & Wasserman, P.C., proposes this Second Amended Plan of
Reorganization pursuant to 11 U.S.C. (S) 1121(a) (hereinafter referred to as the
"APMI Plan"):
ARTICLE I
DEFINITIONS
-----------
All capitalized terms used herein shall have the respective meanings set
forth below or as otherwise assigned in the Plan. All other terms shall have
the meanings assigned to such terms in the Bankruptcy Code or the Bankruptcy
Rules, or if none, by common usage.
1.1 "ACSTAR" shall mean ACSTAR Insurance Company. ACSTAR has issued bonds
to secure the Moab Cleanup Obligation and the Other Cleanup Obligations of Atlas
and certain of its subsidiaries.
1.2 "ACSTAR Bonds" shall mean Bond #6149 for the Carter Raymond Property,
Bond #6039, #6876 and Bond #6907 for the Grassy Mountain property, Bonds #5659,
#5660 and #5661 for the Gold Bar property, and any other bonds issued by ACSTAR
for the benefit of Atlas, AGMI or APMI, except those bonds defined as the ACSTAR
Moab Bonds, having a collective face amount of $1,790,000 and $5,675,000 (less
approximately $189,000) held in an escrow account for the benefit of ACSTAR with
Colorado State Bank as the escrow agent (the "Escrow Fund"). The
<PAGE>
security for the ACSTAR Bonds and the ACSTAR Moab Bond are cross-collateralized
and represent joint and several obligations of Atlas, APMI and AGMI.
1.3 "ACSTAR Moab Bond" shall mean Bond #5652 for the Moab Utah Site
Cleanup Obligations in the face amount of $6,500,000 and secured by the Escrow
Fund. The security for the ACSTAR Bonds and the ACSTAR Moab Bond is the same
and are cross-collateralized and constitute joint and several obligations of
Atlas, APMI and AGMI.
1.4 "Administrative Expense" shall mean any cost or expense of
administration of Chapter 11 allowed under 11 U.S.C. (S) 503(b) of the Code.
1.5 "Affiliate" shall mean any entity affiliated with APMI pursuant to 11
U.S.C. (S) 101(2).
1.6 "AGMI" shall mean Atlas Gold Mining Inc., a Nevada corporation, the
Chapter 11 Debtor under Case No. 99-10889 DEC.
1.7 "AGMI Plan" shall mean the Plan of Reorganization, as amended,
submitted by the Debtor, Atlas Gold Mining Inc.
1.8 "Allowed Claim" shall mean (a) an unsecured claim against APMI which
is set forth in APMI's schedules other than an unsecured claim against APMI
scheduled by APMI as disputed, contingent or unliquidated; (b) an unsecured
claim against APMI which has been filed pursuant to 11 U.S.C. (S) 501, and with
respect to which no objection to the allowance thereof has been interposed
within sixty (60) days after the Effective Date, or as to which any objection
has been determined by Final Order; provided however, that interest which would
have accrued on or after January 26, 1999, shall not be a part of any Allowed
Claim. Allowed Claims may include, but are not limited to, claims that arise
from the rejection of executory contracts.
1.9 "Allowed Secured Claim" shall mean an Allowed Claim secured by
property of APMI.
1.10 "APMI" shall mean Atlas Precious Metals Inc., a Nevada corporation,
the Chapter 11 Debtor under Case No. 99-10890 SBB.
1.11 "APMI Plan" shall mean this Plan of Reorganization, as amended,
submitted by the Debtor, Atlas Precious Metals Inc.
1.12 "Atlas" shall mean Atlas Corporation, a Delaware corporation, the
Chapter 11 Debtor under Case No. 98-23331 DEC.
1.13 "Atlas Plan" shall mean the Plan of Reorganization, as amended,
submitted by the Debtor, Atlas.
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1.14 "Bankruptcy Case" shall mean the APMI Chapter 11 case pending in the
United States Bankruptcy Court for the District of Colorado which has been
jointly administered with the cases of Atlas and AGMI.
1.15 "Bankruptcy Code" or "Code" shall mean Title II of the Bankruptcy
Reform Act of 1978, 11 U.S.C. (S)(S) 101, et seq., as amended.
1.16 "Bar Date" shall mean April 30, 1999.
1.17 "Chapter 11" shall mean Chapter 11 of the Code.
1.18 "Claim" shall mean a claim against APMI as defined in 11 U.S.C. (S)
101(5).
1.19 "Confirmation" shall mean the entry by the Court of an order
confirming the Plan in accordance with Chapter 11 of the Code.
1.20 "Contested Claim" shall mean any Claim which has been scheduled by
APMI as disputed, contingent, or unliquidated or any Claim as to which an
objection to the allowance thereof has been or will be filed within sixty (60)
days after the Effective Date regardless of whether the Claim was scheduled as
disputed, contingent or unliquidated by the Debtor. Contested Claims shall be
treated under the provisions of Article X of this Plan until allowance or
disallowance of such claim has been determined by a Final Order. Contested
claims include claims which APMI believes should be objected to in whole or in
part. Contested claims further include any claims held by creditors against
whom APMI believes actions may be brought under Sections 544, 547, 548 or 549 of
the Bankruptcy Code.
1.21 "Court" shall mean the United States District Court for the District
of Colorado in Bankruptcy.
1.22 "Gerald E. Davis" or "Davis" shall mean the former officer and
director of Atlas, and former officer of AGMI and APMI who was the defendant in
Adversary Case No. 99-1122 MSK captioned Atlas Corporation, Atlas Gold Mining
Inc., and Atlas Precious Metals, Inc. v. Gerald E. Davis.
1.23 "Davis Collateral" shall mean that property described below in which
a security interest was granted in a portion of the Gold Bar property, under the
Settlement Agreement between the Atlas Parties and Davis dated July 9, 1999
approved by Order of the Bankruptcy Court dated August 24, 1999:
Section 27, T22 N-R 49 E. MDM, situated in the Roberts Mountain Mining
District, Eureka County, Nevada,
Patented Millsite Claims Mineral Survey # Patent # Acres
- -------------------------- ---------------- ---------- -----
AM 108 5005 27-89-0038 5.0
AM 109 5005 27-89-0038 5.0
AM 115 5005 27-89-0038 5.0
AM 116 5005 27-89-0038 5.0
AM 117 5005 27-89-0038 5.0
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<PAGE>
together with all of the equipment, books and records related to the above
described property. The property subject to said security interests shall
include the Mill Building, Mill equipment, and other fixtures in the Mill
Building, including the attached refinery located on the patented Millsite
claims described above.
1.24 "Debtor" and "Debtor-in-Possession" shall mean APMI.
1.25 "Disclosure Statement" shall mean the Amended Joint Disclosure
Statement describing the Atlas Plan, the AGMI Plan and the APMI Plan, approved
by the Court, and distributed to the various classes as provided in 11 U.S.C.
(S) 1125.
1.26 "Effective Date"shall mean the first business day following thirty
(30) days after the date the order confirming the APMI Plan becomes a Final
Order.
1.27 "Escrow Fund" shall mean the $5,675,000 (less approximately $189,000)
held in an escrow account for the benefit of ACSTAR with Colorado State Bank as
the escrow agent.
1.28 "Final Order" shall mean an order or a judgment as to which the time
to appeal or seek review or rehearing has expired. In the event that an appeal
or petition for rehearing is filed, an order or judgment shall be final unless
an order enters granting a stay pending appeal or petition for rehearing.
1.29 "Gold Bar property" shall mean the gold resource, mill facilities and
any other real and personal property located on the gold mining property located
in Eureka County, Nevada commonly referred to as Gold Bar, owned by AGMI and
APMI.
1.30 "Grassy Mountain property" shall mean the gold mining project is
located in northern Malheur County, Oregon, approximately 22 miles southwest of
Vale, Oregon, owned by APMI, commonly referred to as Grassy Mountain.
1.31 "Insider" means any entity defined in 11 U.S.C. (S) 101(31)(B).
1.32 "Late Filed Claims" shall mean any claim filed in the APMI Bankruptcy
Case after April 30, 1999.
1.33 "Moab Cleanup Obligation" shall mean any obligation of Atlas under
the Moab License or under any federal, state or municipal rules, regulations or
statutes to pay for or perform any remediation or cleanup at the Moab Utah Site
or any other location which is currently or in the past been operated or owned
by Atlas.
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<PAGE>
1.34 "Moab Land" and "Moab Utah Site" shall mean 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.
1.35 "Moab License" shall mean Source Material License SUA-917.
1.36 "Moab Uranium Millsite Transfer Agreement" or "MUMTA" shall mean that
certain Agreement negotiated between Atlas, the Creditors Committee, the NRC,
the State of Utah and ACSTAR approved by Order of the Bankruptcy Court dated
June 22, 1999.
1.37 "NRC" shall mean the Nuclear Regulatory Commission, an agency of the
federal government having jurisdiction over the Moab Utah Site.
1.38 "Other Cleanup Obligations" shall mean any obligation of Atlas, APMI
or AGMI under any federal, state or municipal rules, regulations or statutes to
pay for or perform any remediation or cleanup at any location other than the
Moab Utah Site which is currently or in the past been owned or operated,
including, but not limited to, the Carter Raymond, Gold Bar and Grassy Mountain
properties.
1.39 "Post-petition" shall mean anytime on or subsequent to January 26,
1999.
1.40 "Pre-petition" shall mean anytime prior to January 26, 1999.
1.41 "Pro Rata" shall mean with respect to any claimant, the percentage
which the Allowed Claim of a creditor bears to the sum of all Allowed Claims in
the same class as such Allowed Claim.
1.42 "Reclamation Trust" shall mean the trust to be formed pursuant to
paragraph 4.3 of the Atlas Plan in compliance with the consent and approval of
the NRC.
1.43 "Reclamation Trustee" shall mean the person or entity selected by the
NRC with the agreement of the designated representative of Utah, prior to the
Effective Date.
1.44 "Reorganized APMI" shall mean the reorganized Atlas Precious Metals
Inc. under the confirmed APMI Plan.
1.45 "Utah" shall mean the State of Utah.
1.46 "Water Rights" shall mean Atlas' rights to water 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. 6111 and 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; and (d) Water Right Number 99-32 for
.004 cfs from Seep Springs (approx. 4 miles from Fry Canyon).
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ARTICLE II
2.1 Claims.
There are no Classes 1-19 under the APMI Plan as Classes 1-19 have been
reserved for the classes under the Atlas Plan. Classes 20-39 have been reserved
for classes under the APMI Plan. Classes 40 through 59 have been reserved for
classes under the AGMI Plan. The reserved classes have been implemented to
avoid confusion in the discussion of the treatment of the classes under the
Atlas, AGMI and APMI plans in the Disclosure Statement.
Class 20. Allowed Administrative Expense Claims as defined in 11
U.S.C. (S) 503 of the Code against APMI. All fees payable to the U.S. Trustee
shall be paid in full as they become.
Class 21. Any allowed unsecured and/or secured priority tax claims of
any taxing authority holding claims under 11 U.S.C. (S)507(a)(8) against APMI.
Class 22. Unimpaired Claims of Holders of Unexpired Leases and
Executory Contracts against APMI.
Class 23. Unimpaired Secured Claims of Merrill Lynch.
Class 24. Unimpaired Secured Claims of the State of Oregon for
Cleanup obligations associated with the Grassy Mountain Mining Site.
Class 25a. Impaired Secured Claims of ACSTAR.
Class 25b. Impaired Unsecured and Administrative Claims of ACSTAR.
Class 26. Any unsecured creditors with allowed claims of less than
$1,000 and any creditors holding claims in excess of $1,000 electing to accept
$1,000 in full payment of their claims.
Class 27. Impaired Claims of General Unsecured Creditors of APMI.
Class 28. Impaired Claims held by Atlas.
Class 29 Impaired Claims of Gerald E. Davis.
Class 30. Impaired Claims held by any taxing authority for penalties
not related to actual pecuniary loss.
Class 31. Late filed claims.
Class 32. Impaired interests of common stockholders of APMI.
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<PAGE>
ARTICLE III
TREATMENT OF CLAIMS NOT IMPAIRED UNDER THE PLAN
-----------------------------------------------
3.1 Class 20. Allowed Administrative Expenses pursuant to 11 U.S.C.
(S)503. Class 20 Allowed Administrative Expenses as defined by 11 U.S.C. (S)503
shall be paid in cash in full on the Effective Date or shall by paid upon such
other terms as may be agreed upon by APMI and the respective holder of the
claim for Administrative Expenses. All fees payable to the U.S. Trustee program
shall be paid as they become due. Notwithstanding an assertion by the Class 24
and 25 claimants that their claims are entitled to priority under Section 503(b)
of the Bankruptcy Code, the Class 24 and 25 claims shall be treated under Class
24 and 25 respectively of this Plan and not as Class 20 Administrative Expenses.
In the event that APMI does not have sufficient cash to pay the administrative
claim in full on the Effective Date, the administrative expense claim will, with
the agreement of the Claimant, be paid from the proceeds of the sale of Grassy
Mountain or APMI's property at Gold Bar or at such date as APMI has sufficient
funds to pay the claim in full.
3.2 Class 22. Executory Contracts and Unexpired Leases. Class 22 is
comprised of the claims held by parties to unexpired leases or executory
contracts. APMI, prior to the hearing on confirmation, shall file motions to
assume or reject its unexpired leases and executory contracts subject to the
provisions of 11 U.S.C. (S)365 and notice under Fed. R. Bankr. P. 6006. If APMI
moves to assume the unexpired leases and executory contracts, the claims shall
be treated in accordance with the order of the Court granting the assumption.
Any unexpired leases or executory contracts for which a Motion to Assume has not
been filed by APMI prior to the hearing on confirmation shall be deemed
rejected. Under the terms of the lease agreements, in the event that a lease is
rejected, the equipment or property will be returned to the lessor, unless APMI
and the lessor otherwise agree. Any Class 22 claimant asserting a claim for
damages arising from rejection of a lease shall file a proof of claim with the
Bankruptcy Court by the later of the Effective Date or thirty days after entry
of the Order granting the Motion to Reject or the claim shall be forever barred.
The claims held by holders of rejected leases or executory contracts shall be
treated as a Class 27 unsecured claim subject to the limitations of Section 502
of the Code.
3.3 Class 23. Unimpaired Claims of Merrill Lynch. Class 23 is comprised
of the allowed secured claim of Merrill Lynch. The claim of Merrill Lynch arises
from a letter of credit pledged to secure Bond #6907 issued by ACSTAR, the Class
25 claimant to secure the cleanup obligations of APMI at Grassy Mountain. The
letter of credit has been called. The Class 23 Claimant and the Debtor shall
retain all rights, without modification, under the related documents. The Class
23 Claimant is unimpaired and any allowed claim shall be paid by the Reorganized
APMI under the terms of the agreement.
3.4 Class 24. Unimpaired Secured Claims of the State of Oregon for
Cleanup obligations associated with the Grassy Mountain Property. Class 24 is
comprised of the Allowed secured claims of the State of Oregon for Cleanup
obligations associated with the Grassy Mountain Property under permit numbers
23-1095 and 423,0224. The Class 24 claim is secured by Bond #6907 issued by
ACSTAR, the Class 25 claimant. The Class 24 claimant and the Debtor shall retain
all rights, without modification, under Permit Numbers 23-1095 and 423,0224 and
Bond #6907. The Class 24 Claimant is unimpaired.
ARTICLE IV
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<PAGE>
TREATMENT OF CLAIMS IMPAIRED UNDER THE PLAN
-------------------------------------------
4.1 Class 21. Allowed Secured and Unsecured Tax Claims pursuant to 11
U.S.C. (S) 507(a)(8). Class 21 is comprised of Allowed Unsecured Tax Claims
under U.S.C. (S)507(a)(8) excluding claims for penalties not related to actual
pecuniary loss. The Class 21 claimants shall receive 100% of their secured and
unsecured priority claims in quarterly installments with interest at 8% per
annum. The Class 21 claims shall be paid in full within six years from the date
of assessment. Claims for penalties not related to actual pecuniary loss shall
be treated under Class 30. Payments to the Class 21 claimants shall commence
within fifteen days after the close of the first calendar quarter ending after
the Effective Date of the APMI Plan. The Class 21 claimants shall retain their
prepetition liens, if any, on property of the Reorganized APMI pending payment
in full of the Class 21 claims. The allowed amount of any Class 21 claim shall
be subject to determination under Section 505 of the Bankruptcy Code. The Debtor
shall file any requests for determination under Section 505 within sixty days of
the Effective Date of the Plan. Any disputed portion of a Class 21 Claim shall
be treated as a Contested Claim in accordance with the provisions of Article X
of this Plan.
4.2 Class 25a. Allowed Secured Claims of ACSTAR The Class 25a claims are
comprised of the Allowed Secured Claims of ACSTAR which were secured by certain
letters of credit in the aggregate amount of $5,425,000 plus the Escrow Fund The
ACSTAR Allowed Secured Claims are based upon the ACSTAR Bonds and ACSTAR Moab
Bond in the aggregate amount of $8,290,000 to secure Moab Cleanup Obligations
and Other Cleanup Obligations including the cleanup obligations owing to the
Class 25 claimant under the APMI Plan. ACSTAR's secured claims against Atlas,
AGMI and APMI are cross collateralized. ACSTAR has drawn on the letters of
credit and is entitled to use the proceeds from the letters of credit in order
to pay the Class 4 creditors under the Atlas Plan and to reimburse itself for
the actual amount incurred under the ACSTAR Bonds for Other Cleanup Obligations
including the cleanup obligations owing to the Class 25 claimant under the APMI
Plan, and its unpaid fees and expenses. Furthermore, any amount remaining from
the Escrow fund may be used by ACSTAR for the same purposes. To the extent any
funds remain in the Escrow Fund after satisfaction of the Other Cleanup
Obligations secured by the ACSTAR Bonds and any unpaid fees and expenses ACSTAR
has incurred on said Bonds, such funds shall be remitted to the Reorganized
Atlas. ACSTAR shall retain its rights under the escrow agreement. The
foregoing treatment shall constitute satisfaction in full of the Class 25a
Allowed Secured Claim.
4.3 Class 25b. Impaired Unsecured and Administrative Claims of ACSTAR
The Class 25(b) claim is comprised of the unsecured deficiency claim which
ACSTAR has for the Other Cleanup Obligations which it has to pay, and unpaid
fees and expenses in excess of its Class 25(a) Allowed Secured Claim, which
claim shall not exceed $500,000. Any claim by ACSTAR that its claims are
entitled to treatment as a Class 20 Administrative Expense, under any theory,
and any potential claim against ARISUR, shall be waived and released. For
purposes of voting and feasibility the Class 25(b) claim shall be estimated at
$500,000. ACSTAR's unsecured claims against Atlas, AGMI and APMI shall
collectively not exceed $500,000. The claims shall be allocated among the
estates based upon actual damage, with the claim applied first to AGMI, then to
APMI and then to Atlas. The actual amount of the Class 25(b) monetary claim
allowed against
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<PAGE>
APMI shall be paid as a Class 27 Allowed Unsecured Claim. On the later of
Effective Date of the APMI Plan or at such time as the Class 25(b) creditors
claim is actually determined, it shall receive in full satisfaction of its claim
a monetary claims equal to the actual amount expended for Other Cleanup
Obligations, plus fees and expenses, not to exceed $500,000, which shall be
treated as a Class 27 unsecured claim and shall receive shares representing its
pro rata share (determined with respect to Class 27 and 28 claimants) of the
outstanding common stock of the Reorganized APMI; provided that distributions to
the Class 25(b) creditor shall be held by a mutually acceptable escrow agent
pending determination of ACSTAR's responsibility for the Other Cleanup
Obligations . If Bonds #5659, #5660 and #5661 for the Gold Bar property are
terminated without being called and/or there is no unsecured deficiency, the
Allowed Class 25(b) claim shall be $0 and the shares which are being held in
escrow shall remain treasury stock.
4.4 Class 26. Administrative Convenience Class. Class 26 is comprised of
the claims of unsecured creditors with allowed claims of $1,000 or less and
unsecured creditors holding claims in excess of $1,000 electing to accept $1,000
in full payment of their claims. The Class 26 claims shall be paid in full
without interest on the Effective Date. Creditors wishing to elect to have their
claim treated under Class 26 shall make an election in writing to be received by
undersigned counsel for the Debtor on or before the due date for tendering
ballots to this Plan.
4.5 Class 27. Allowed Unsecured Claims. Class 27 is comprised of the
Allowed Unsecured Claims against APMI. The Allowed Class 27 creditors shall
receive:
(A) Their pro rata share of the proceeds of from the sale or joint venture
of APMI's interests in the Gold Bar and/or Grassy Mountain properties after
payment of costs of sale and after satisfaction of the Allowed Class 20 and
21 Claims. The funds shall be distributed on a Pro Rata basis between the
Allowed Claims of the Class 27 and 28 creditors who for shall be treated as
one class.
(B) Their pro rata share of the common stock to be issued by the
Reorganized APMI. The stock shall be distributed on a Pro Rata basis
between the Allowed Claims of the Class 27 and 28 creditors. For purposes
of this distribution, the Class 27 and 28 Creditors shall be treated as one
class.
(C) The Class 27 and 28 claims shall bear interest at the rate of 8
percent per annum from the Effective Date. Interest shall be payable only
if the proceeds of the sale as provided in (A) above are sufficient to pay
the Allowed Class 27 and 28 claims in full.
4.6 Class 28. Claims Held by Atlas. Class 28 is comprised of the claims
held by Atlas other than its claims as an interest holder treated under Class
30. Class 28 claims arise from an inter-company payable for cash advanced to
APMI. The allowed claim of AGMI under the Atlas Plan shall first be offset
against AGMI's obligations to APMI which will reduce the accounts receivable
owed by APMI to Atlas. The net Allowed Class 28 Claim shall be treated on a Pro
Rata basis with the Class 27 creditors and shall receive its pro rata share of
the distributions of proceeds of sale of APMI's interest in the Gold Bar and
Grassy Mountain properties and stock issued by the Reorganized APMI.
-9-
<PAGE>
4.7. Class 29 Claims Held by Gerald E. Davis Class 29 is comprised of
the claims of Gerald E. Davis which arise under the terms of the Settlement
Agreement dated July 9, 1999 between the parties resolving the disputes and
claims between Gerald E. Davis and Atlas, AGMI and APMI raised in the Chapter 11
proceeding and in Adversary Case No. 99-1122 MSK captioned Atlas Corporation,
Atlas Gold Mining Inc., and Atlas Precious Metals, Inc. v. Gerald E. Davis. The
claims of Gerald E. Davis shall also be treated as a Class 13 claim under the
Atlas Plan and a Class 43 claim under the AGMI Plan. Davis shall be granted a
security interest by Atlas AGMI and APMI in the Davis Collateral at Gold Bar
described herein to the extent of $60,000. The security interest granted to
Davis shall be subordinate to the tax claims of Eureka County and any
administrative expenses.
4.8 Class 30. Claims Held by Any Taxing Authority for Penalties Not
Related to Actual Pecuniary Loss. The Class 30 Claims are comprised of any
penalty claims held by any taxing authority which are not related to actual
pecuniary loss. The allowed Class 30 claims shall be treated and paid as Class
27 general unsecured claims except the Class 30 claims shall not share in any
distribution of stock of the Reorganized Atlas.
4.9 Class 31. Late Filed Claims. Class 31 is comprised of all late filed
claims against APMI. The Class 31 claims shall be disallowed and shall receive
no distribution under the APMI Plan unless and until the Class 27 and 28 claims
have been paid in full with interest at 8 percent per annum.
4.10 Class 32 Interests of Atlas Corporation. Class 32 is comprised of
the interests of Atlas Corporation which holds one-hundred percent of the stock
of APMI. The interests of the Class 30 interest holder shall be voided. The
Class 32 Interest Holder shall receive no distributions on account of its
interests unless and until the Class 27, 28 and allowed Class 31 claims have
been paid in full with interest at 8% per annum.
-10-
<PAGE>
ARTICLE V
DEFAULT AND PLAN MODIFICATION
-----------------------------
5.1 In the event of any default by the Reorganized APMI of any payment to
any class of claimants arising under the terms of the APMI Plan, the Reorganized
APMI shall have thirty (30) days within which to cure any default in payments
due under this Plan after the date of issuance of written notice from any claim
holder. Written notice shall be provided to the Reorganized APMI and to Debtor's
counsel. The notice to Debtor's counsel shall be served upon Sender &
Wasserman, P.C., 1999 Broadway, Suite 2305, Denver, Colorado 80202, unless
written notice of substitution of legal counsel is served upon the claim holder
at least fifteen (15) days prior to the date notice is sent.
5.2 In the event that the Reorganized APMI fails to cure any default in
the requirements to make payment under the Plan, within forty-five days from the
date that written notice is sent in compliance with paragraph 5.1, the
Reorganized APMI shall be in default under the terms of the Plan.
5.3 At any time after Confirmation of the Plan but before substantial
consummation of the Plan, the Plan may be modified upon the request of the
Reorganized APMI, after notice and a hearing, only to the extent allowed by 11
U.S.C. (S) 1127.
ARTICLE VI
MEANS FOR THE IMPLEMENTATION AND EXECUTION OF THE PLAN
------------------------------------------------------
6.1 On or about the Effective Date, all assets of APMI shall be
transferred to the Reorganized APMI free and clear of all liens, claims, and
interests of creditors, equity holders, and other parties in interest, except as
otherwise provided herein. Specifically, the assets shall be transferred subject
to the liens held by the Class 25(a) and 29 secured creditors and any Class 21
creditor with perfected liens. The Class 23 and 24 creditors shall be entitled
to retain the collateral securing their claims. The Reorganized APMI shall not,
except as otherwise provided in this Plan, be liable to repay any debts which
accrued prior to the Confirmation Date. Except as provided in this APMI Plan,
on the Confirmation Date APMI shall be granted a discharge under 11 U.S.C. (S)
1141.
6.2 On the Effective Date, APMI shall begin implementing its Plan of
Reorganization pursuant to the terms for each class of claimants set forth above
under III and IV above. All payments under the APMI Plan shall come from the
cash held by the Reorganized APMI or proceeds of the sale of its interests in
the Gold Bar and Grassy Mountain properties after costs of sale. The Class 20
administrative expenses may be paid from advances by the Reorganized Atlas.
6.3 The Reorganized APMI shall distribute the proceeds of the sale of its
interests in the Gold Bar and Grassy Mountain properties, after payment of costs
of sale, in order of priority as established in Sections III and IV above within
fifteen days after the close of the calendar quarter in which the proceeds were
received.
-11-
<PAGE>
6.4 If the Allowed Secured Claims secured by APMI's interests in the Gold
Bar and/or Grassy Mountain properties have not been satisfied through the sale,
joint venture, exploration agreement or other agreement with respect to the
properties, by the five year anniversary of the Effective Date, the injunction
precluding action against APMI and its assets shall be lifted as of the first
business day after the five year anniversary of the Effective Date and the
holders of Allowed Secured Claims shall be entitled to pursue their state court
remedies against the collateral securing their claims.
6.5 The stock to be issued by the Reorganized APMI to the Allowed Claims
of the Class25(b), 27 and 28 creditors shall be issued within 90 days after the
Effective Date. In determining the Pro Rata share to be distributed to Contested
Claims under Article X, the shares shall be reserved as if the Contested Claims
were allowed in full and held by the Reorganized APMI pending resolution of the
dispute. If APMI' objections to the claims are sustained by Final Order, the
shares shall not be issued.
6.6 The Reorganized APMI may pursue any claims or recovery actions held by
APMI, including but not limited to recovery under 11 U.S.C. (S)(S)544, 547, 548
and 549. The Reorganized APMI may abandon any claim APMI has against any third
party if it determines that the claim is burdensome or of inconsequential value
and benefit. The Reorganized APMI is authorized to employ counsel to represent
APMI in the litigation or any cause of action or claims held by APMI.
6.7 All funds held by the Reorganized APMI for distribution under the APMI
Plan shall be held in accounts which meet the insurance and guaranty
requirements 11 U.S.C. (S)345(b).
6.8 Following the Effective Date, the Reorganized APMI may compromise
objections to Claims or causes of action referred to in this APMI Plan without
notice and hearing for claims or causes of action asserted in the original
amount of $5,000 or less. Settlements or compromises of any claims or causes of
action asserted in the amount of $5,000 or more shall be subject to notice and
an opportunity for hearing under the provisions after notice in compliance with
the Local Rules of Bankruptcy Procedure.
6.9 After the Effective Date, the Reorganized APMI exercising its business
judgment may sell, operate or abandon any of its assets.
6.10 APMI shall receive a discharge only to the extent permitted by 11
U.S.C. (S) 1141 and APMI shall be entitled to seek injunctive relief from the
Court, if necessary, to enforce any and all provisions of the Plan
ARTICLE VII
CRAM DOWN
---------
7.1 If all of the applicable requirements for confirmation of the APMI
Plan are met as set forth in 11 U.S.C. (S) 1129(a)(1)-(11) except Subparagraph
(8), APMI (subject to the acceptance of
-12-
<PAGE>
the APMI Plan by at least one class which is impaired) hereby requests the Court
confirm the APMI Plan pursuant to 11 U.S.C. (S) 1129(b), notwithstanding the
requirements of Subparagraph (8), as the APMI Plan is fair and equitable and
does not discriminate unfairly with respect to any dissenting, impaired class.
ARTICLE VIII
GENERAL PROVISIONS
------------------
8.1 The Reorganized APMI shall be vested with ownership to all property of
APMI upon the Effective Date.
8.2 The payment of Allowed Administrative Claims and Allowed Secured
Claims shall be in exchange for all claims against APMI and the Reorganized APMI
and shall constitute full settlement, release, discharge, and satisfaction of
all such claims against APMI and the Reorganized APMI.
8.3 Nothing herein contained shall prevent APMI from taking any action as
may be necessary to the enforcement of any cause of action which may exist on
behalf of APMI and which may not have been enforced or prosecuted by APMI prior
to the Effective Date.
8.4 APMI reserves the right to modify the Plan prior to the Confirmation,
and thereafter to modify the Plan in accordance with 11 U.S.C. (S) 1127(b) and
(P) 5.2 hereunder.
8.5 APMI reserves the right to reopen the Chapter 11 case after
Confirmation and dismissal for the purposes set forth in Article XII.
8.6 To the extent that the provisions of the Disclosure Statement are
inconsistent with the provisions of this Plan, the provisions of this Plan shall
control.
8.7 APMI's obligation to pay the quarterly fees owing to the Office of the
United States Trustee pursuant to 28 U.S.C. (S)1930(a)(6) is a continuing
obligation which does not terminate until the Bankruptcy Case is dismissed or
converted.
ARTICLE IX
PROVISION FOR ASSUMPTION OR REJECTION OF EXECUTORY CONTRACTS
------------------------------------------------------------
9.1 All unexpired leases and executory contracts between APMI and any
other party which have not prior to the Effective Date of the APMI Plan been
affirmatively assumed by APMI by the filing of an appropriate motion are hereby
rejected.
-13-
<PAGE>
ARTICLE X
PROVISION AS TO CONTESTED CLAIMS
--------------------------------
10.1 APMI or the Reorganized APMI may, at any time within ninety (90) days
after the Effective Date file an objection to any claim which in its opinion
should be objected to as improper, in whole or in part, regardless of whether
the claim was scheduled as disputed, contingent or unliquidated. APMI may
further designate claims held by creditors against whom they believe actions may
be brought under Sections 544, 547, 548 or 549 of the Bankruptcy Code as
Contested Claims by sending notice in writing to the Claimant within sixty (60)
days after the Effective Date.
Upon the filing of such objection or service of said written notice, such
claim shall be considered a Contested Claim, and any cash or other instruments
or property otherwise distributable to such creditor under this APMI Plan shall
be held by APMI in escrow until final disposition of the objection to the claim
either by settlement or entry of a Final Order. If the claim is only contested
in part, payment shall be made to the claimant on the uncontested portion under
the provisions of Article IV and the balance shall be treated as a Contested
Claim under the provisions of Article X. If the objection is overruled or
denied, in whole or in part, or the claim is allowed by stipulation of APMI and
the claimant, such claimant shall receive the amount of cash or property
provided in this APMI Plan to the extent of the amount of the claim finally
allowed, including back installments.
10.2 From and after the Effective Date, the Reorganized APMI shall reserve
and hold for the benefit of each holder of a Contested Claim cash in an amount
equal to the Pro Rata payments which would have been made to the holder of such
contested claim if it were an Allowed Claim in an amount equal to the lesser of:
(i) the amount of the Contested Claim or (ii) the amount in which the Contested
Claim shall be estimated by the Bankruptcy Court pursuant to (S) 502 of the
Bankruptcy Code for purposes of allowance, which amount shall constitute and
represent the maximum amount in which such claim may ultimately become an
Allowed Claim. No payments or distributions shall be made with respect to all
or any portion of any Contested Claim pending the entire resolution thereof by
Final Order.
ARTICLE XI
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS OF DEBTOR
-----------------------------------------------------------
AND STOCK INCENTIVE PLAN
------------------------
11.1 As may be required, the Articles and Bylaws of APMI shall be amended
on or before the Effective Date to the extent necessary to effectuate the
provisions of the APMI Plan, including but not limited to, reincorporating the
Reorganized APMI under the laws of the State of Colorado, voiding its existing
common stock and issuing new common stock in compliance with the provisions of
this APMI Plan. No fractional shares of stock shall be issued.
-14-
<PAGE>
11.2 Board of Directors and Annual Shareholders Meeting.
The current Board of Directors shall serve until the next annual or special
meeting of shareholders, called in accordance with the Bylaws. At the annual or
special meeting, the shareholders shall elect a new Board of Directors.
ARTICLE XII
RETENTION OF JURISDICTION
-------------------------
The Court shall retain jurisdiction over this Chapter 11 case and related
core and non-core proceedings, for the following purposes:
12.1 To hear and determine any and all objections to the allowance of
claims or interests.
12.2 To determine any and all applications for allowances of compensation
and reimbursement of expenses and any other fees and expenses authorized to be
paid or reimbursed under the Code or the Plan.
12.3 To hear and determine any and all pending applications for the
rejection or assumption, or for the assumption and assignment, as the case may
be, of executory contracts or unexpired leases to which APMI is party, and to
hear and determine any and all claims arising therefrom.
12.4 To hear and determine any and all applications, adversary
proceedings, and contested or litigated matters that may be pending on the
Effective Date or that APMI may bring subsequent to the Effective Date or to
which APMI may be made a party.
12.5 To consider any modifications of the APMI Plan, to remedy any defect
or omission or reconcile any inconsistency in the APMI Plan or in the orders of
the Bankruptcy Court, including the Order of Confirmation.
12.6 To hear and determine any request under Fed. R. Bankr. P. 2004 to
allow APMI to complete any pending investigation as to potential assets or
liabilities.
12.7 To hear and determine all controversies, suits, and disputes that may
arise in connection with the interpretation, enforcement, or consummation of the
APMI Plan, including any disputes between the plan proponents.
12.8 To consider and act on the compromise and settlement of any claim or
cause of action by or against APMI.
12.9 To issue orders in aid of execution of the APMI Plan as contemplated
by (S) 1142 of the Code.
-15-
<PAGE>
12.10 To determine such other matters as may be set forth in the Order or
Confirmation or which may arise in connection with the Plan or the Order of
Confirmation.
Dated this 16th day of September, 1999.
Respectfully submitted,
DEBTORS:
Atlas Precious Metals Inc.
By: /s/ Gregg Shafter
-----------------------------------------
Gregg Shafter, President
SENDER & WASSERMAN, P.C.
By: /s/ Harvey Sender
-----------------------------------------
Harvey Sender, #7546
John B. Wasserman, #10011
Bonnie A. Bell, #14923
Daniel J. Garfield, #26054
1999 Broadway, Suite 2305
Denver, Colorado 80202
(303) 296-1999 Telephone
(303) 296-7600 Facsimile
E-mail: [email protected]
ATTORNEYS FOR DEBTOR
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<PAGE>
EXHIBIT 10.4
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLORADO
<TABLE>
<CAPTION>
<S> <C> <C>
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)
</TABLE>
- --------------------------------------------------------------------------------
SECOND AMENDED PLAN OF REORGANIZATION OF ATLAS GOLD MINING INC.
- --------------------------------------------------------------------------------
Atlas Gold Mining Inc., Debtor in Possession, ("AGMI") by and through its
counsel Sender & Wasserman, P.C., proposes this Second Amended Plan of
Reorganization pursuant to 11 U.S.C. (S) 1121(a) (hereinafter referred to as the
"AGMI Plan"):
ARTICLE I
DEFINITIONS
-----------
All capitalized terms used herein shall have the respective meanings set
forth below or as otherwise assigned in the Plan. All other terms shall have
the meanings assigned to such terms in the Bankruptcy Code or the Bankruptcy
Rules, or if none, by common usage.
1.1 "ACSTAR" shall mean ACSTAR Insurance Company. ACSTAR has issued bonds
--------
to secure the Moab Cleanup Obligation and the Other Cleanup Obligations of Atlas
and certain of its subsidiaries.
1.2 "ACSTAR Bonds" shall mean Bond #6149 for the Carter Raymond Property,
--------------
Bond #6039, #6876 and Bond #6907 for the Grassy Mountain property, Bonds #5659,
#5660 and #5661 for the Gold Bar property, and any other bonds issued by ACSTAR
for the benefit of Atlas, AGMI or APMI, except those bonds defined as the ACSTAR
Moab Bonds, having a collective face amount of $1,790,000 and $5,675,000 (less
approximately $189,000) held in an escrow account for the benefit of ACSTAR with
Colorado State Bank as the escrow agent (the "Escrow Fund"). The
<PAGE>
security for the ACSTAR Bonds and the ACSTAR Moab Bond are cross-collateralized
and represent joint and several obligations of Atlas, APMI and AGMI.
1.3 "ACSTAR Moab Bond" shall mean Bond #5652 for the Moab Utah Site
------------------
Cleanup Obligations in the face amount of $6,500,000 and secured by the Escrow
Fund. The security for the ACSTAR Bonds and the ACSTAR Moab Bond is the same and
are cross-collateralized and constitute joint and several obligations of Atlas,
APMI and AGMI.
1.4 "Administrative Expense" shall mean any cost or expense of
------------------------
administration of Chapter 11 allowed under 11 U.S.C. (S) 503(b) of the Code.
1.5 "Affiliate" shall mean any entity affiliated with AGMI pursuant to 11
-----------
U.S.C. (S) 101(2).
1.6 "AGMI" shall mean Atlas Gold Mining Inc., a Nevada corporation, the
-----
Chapter 11 Debtor under Case No. 99-10889 DEC.
1.7 "AGMI Plan" shall mean this Plan of Reorganization, as amended,
-----------
submitted by the Debtor, Atlas Gold Mining Inc.
1.8 "Allowed Claim" shall mean (a) an unsecured claim against AGMI which
---------------
is set forth in AGMI's schedules other than an unsecured claim against AGMI
scheduled by AGMI as disputed, contingent or unliquidated; (b) an unsecured
claim against AGMI which has been filed pursuant to 11 U.S.C. (S) 501, and with
respect to which no objection to the allowance thereof has been interposed
within sixty (60) days after the Effective Date, or as to which any objection
has been determined by Final Order; provided however, that interest which would
have accrued on or after January 26, 1999, shall not be a part of any Allowed
Claim. Allowed Claims may include, but are not limited to, claims that arise
from the rejection of executory contracts.
1.9 "Allowed Secured Claim" shall mean an Allowed Claim secured by
-----------------------
property of AGMI.
1.10 "APMI" shall mean Atlas Precious Metals Inc., a Nevada corporation,
------
the Chapter 11 Debtor under Case No. 99-10890 SBB.
1.11 "APMI Plan" shall mean the Plan of Reorganization, as amended,
-----------
submitted by the Debtor, Atlas Precious Metals Inc.
1.12 "Atlas" shall mean Atlas Corporation, a Delaware corporation, the
-------
Chapter 11 Debtor under Case No. 98-23331 DEC.
1.13 "Atlas Plan" shall mean the Plan of Reorganization, as amended,
------------
submitted by the Debtor, Atlas.
-2-
<PAGE>
1.14 "Bankruptcy Case" shall mean the AGMI Chapter 11 case pending in the
-----------------
United States Bankruptcy Court for the District of Colorado which has been
jointly administered with the cases of Atlas and APMI.
1.15 "Bankruptcy Code" or "Code" shall mean Title II of the Bankruptcy
----------------- ------
Reform Act of 1978, 11 U.S.C. (S)(S) 101, et seq., as amended.
-- ----
1.16 "Bar Date" shall mean April 30, 1999.
----------
1.17 "Chapter 11" shall mean Chapter 11 of the Code.
------------
1.18 "Claim" shall mean a claim against AGMI as defined in 11 U.S.C. (S)
-------
101(5).
1.19 "Confirmation" shall mean the entry by the Court of an order
--------------
confirming the Plan in accordance with Chapter 11 of the Code.
1.20 "Contested Claim" shall mean any Claim which has been scheduled by
-----------------
AGMI as disputed, contingent, or unliquidated or any Claim as to which an
objection to the allowance thereof has been or will be filed within sixty (60)
days after the Effective Date regardless of whether the Claim was scheduled as
disputed, contingent or unliquidated by the Debtor. Contested Claims shall be
treated under the provisions of Article X of this Plan until allowance or
disallowance of such claim has been determined by a Final Order. Contested
claims include claims which AGMI believes should be objected to in whole or in
part. Contested claims further include any claims held by creditors against whom
AGMI believes actions may be brought under Sections 544, 547, 548 or 549 of the
Bankruptcy Code.
1.21 "Court" shall mean the United States District Court for the District
-------
of Colorado in Bankruptcy.
1.22 "Gerald E. Davis" or "Davis" shall mean the former officer and
-----------------------------
director of Atlas, and former officer of AGMI and APMI who was the defendant in
Adversary Case No. 99-1122 MSK captioned Atlas Corporation, Atlas Gold Mining
Inc., and Atlas Precious Metals, Inc. v. Gerald E. Davis.
1.23 "Davis Collateral" shall mean that property described below in which
------------------
a security interest was granted in a portion of the Gold Bar property, under the
Settlement Agreement between the Atlas Parties and Davis dated July 9, 1999
approved by Order of the Bankruptcy Court dated August 24, 1999:
Section 27, T22 N-R 49 E. MDM, situated in the Roberts Mountain
Mining District, Eureka County, Nevada,
<TABLE>
<CAPTION>
Patented Millsite Claims Mineral Survey # Patent # Acres
- ------------------------ ---------------- -------- -----
<S> <C> <C> <C>
AM 108 5005 27-89-0038 5.0
AM 109 5005 27-89-0038 5.0
</TABLE>
-3-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AM 115 5005 27-89-0038 5.0
AM 116 5005 27-89-0038 5.0
AM 117 5005 27-89-0038 5.0
</TABLE>
together with all of the equipment, books and records related to the above
described property. The property subject to said security interests shall
include the Mill Building, Mill equipment, and other fixtures in the Mill
Building, including the attached refinery located on the patented Millsite
claims described above.
1.24 "Debtor" and "Debtor-in-Possession" shall mean AGMI.
-------- ----------------------
1.25 "Disclosure Statement" shall mean the Amended Joint Disclosure
-----------------------
Statement describing the Atlas Plan, the AGMI Plan and the APMI Plan, approved
by the Court, and distributed to the various classes as provided in 11 U.S.C.
(S) 1125.
1.26 "Effective Date"shall mean the first business day following thirty
---------------
(30) days after the date the order confirming the AGMI Plan becomes a Final
Order.
1.27 "Escrow Fund" shall mean the $5,675,000 (less approximately $189,000)
------------
held in an escrow account for the benefit of ACSTAR with Colorado State Bank as
the escrow agent.
1.28 "Final Order" shall mean an order or a judgment as to which the time
-------------
to appeal or seek review or rehearing has expired. In the event that an appeal
or petition for rehearing is filed, an order or judgment shall be final unless
an order enters granting a stay pending appeal or petition for rehearing.
1.29 "Gold Bar property" shall mean the gold resource, mill facilities and
-------------------
any other real and personal property located on the gold mining property located
in Eureka County, Nevada commonly referred to as Gold Bar, owned by AGMI and
APMI.
1.30 "Insider" means any entity defined in 11 U.S.C. (S) 101(31)(B).
---------
1.31 "Late Filed Claims" shall mean any claim filed in the AGMI Bankruptcy
-------------------
Case after April 30, 1999.
1.32 "Moab Cleanup Obligation" shall mean any obligation of Atlas under
-------------------------
the Moab License or under any federal, state or municipal rules, regulations or
statutes to pay for or perform any remediation or cleanup at the Moab Utah Site
or any other location which is currently or in the past been operated or owned
by Atlas.
1.33 "Moab Land" and "Moab Utah Site" shall mean 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.
1.34 "Moab License" shall mean Source Material License SUA-917.
--------------
-4-
<PAGE>
1.35 "Moab Uranium Millsite Transfer Agreement" or "MUMTA" shall mean that
----------------------------------------------------
certain Agreement negotiated between Atlas, the Creditors Committee, the NRC,
the State of Utah and ACSTAR approved by Order of the Bankruptcy Court dated
June 22, 1999.
1.36 "NRC" shall mean the Nuclear Regulatory Commission, an agency of the
-----
federal government having jurisdiction over the Moab Utah Site.
1.37 "Other Cleanup Obligations" shall mean any obligation of Atlas, APMI
---------------------------
or AGMI under any federal, state or municipal rules, regulations or statutes to
pay for or perform any remediation or cleanup at any location other than the
Moab Utah Site which is currently or in the past been owned or operated,
including, but not limited to, the Carter Raymond, Gold Bar and Grassy Mountain
properties.
1.38 "Post-petition" shall mean anytime on or subsequent to January 26,
---------------
1999.
1.39 "Pre-petition" shall mean anytime prior to January 26, 1999.
--------------
1.40 "Pro Rata" shall mean with respect to any claimant, the percentage
----------
which the Allowed Claim of a creditor bears to the sum of all Allowed Claims in
the same class as such Allowed Claim.
1.41 "Reclamation Trust" shall mean the trust to be formed pursuant to
-------------------
paragraph 4.3 of the Atlas Plan in compliance with the consent and approval of
the NRC.
1.42 "Reclamation Trustee" shall mean the person or entity selected by the
---------------------
NRC with the agreement of the designated representative of Utah, prior to the
Effective Date.
1.43 "Reorganized AGMI" shall mean the reorganized Atlas Gold Mining Inc.
-----------------
under the confirmed AGMI Plan.
1.44 "Utah" shall mean the State of Utah.
------
1.45 "Water Rights" shall mean Atlas' rights to water 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. 6111 and 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; and (d) Water Right Number 99-32 for
.004 cfs from Seep Springs (approx. 4 miles from Fry Canyon).
ARTICLE II
2.1 Claims.
There are no Classes 1-39 under the AGMI Plan as Classes 1-19 have been
reserved for the classes under the Atlas Plan. Classes 20-39 have been reserved
for classes under the APMI Plan.
-5-
<PAGE>
Classes 40 through 59 have been reserved for classes under the AGMI Plan. The
reserved classes have been implemented to avoid confusion in the discussion of
the treatment of the classes under the Atlas, AGMI and APMI plans in the
Disclosure Statement.
Class 40. Allowed Administrative Expense Claims as defined in 11
---------
U.S.C. (S) 503 of the Code against AGMI. All fees payable to the U.S. Trustee
shall be paid in full as they become due.
Class 41. Any allowed unsecured and/or secured priority tax claims
of any taxing authority, including the claims asserted by Eureka County Nevada,
holding claims under 11 U. S.C. (S)507(a)(8) against AGMI.
Class 42. Unimpaired Claims of Holders of Unexpired Leases and
---------
Executory Contracts against AGMI.
Class 43 Impaired Secured Claims of Gerald E. Davis.
--------
Class 44 Unimpaired Secured Claims of Bureau of Land Management
--------
for Cleanup obligations associated with the Gold Bar Property.
Class 45 a. Impaired Secured Claims of ACSTAR.
-----------
Class 45 b. Impaired Unsecured and Administrative Claims of ACSTAR.
-----------
Class 46 Unimpaired Secured Claims of Norwest Bank.
--------
Class 47 Impaired Contingent Secured Claims of United States Fire
--------
Insurance Company.
Class 48. Any unsecured creditors with allowed claims of less than
---------
$1,000 and any creditors holding claims in excess of $1,000 electing to accept
$1,000 in full payment of their claims.
Class 49. Impaired Claims of General Unsecured Creditors of AGMI.
---------
Class 50. Impaired Claims held by APMI.
---------
Class 51. Impaired Claims held by any taxing authority for
---------
penalties not related to actual pecuniary loss.
Class 52. Late filed claims.
---------
Class 53. Impaired interests of common stockholders of AGMI.
---------
-6-
<PAGE>
ARTICLE III
TREATMENT OF CLAIMS NOT IMPAIRED UNDER THE PLAN
-----------------------------------------------
3.1 Class 40. Allowed Administrative Expenses pursuant to 11 U.S.C.
--------- -----------------------------------------------------
(S)503. Class 40 Allowed Administrative Expenses as defined by 11 U.S.C. (S)503
- -------
shall be paid in cash in full on the Effective Date or shall by paid upon such
other terms as may be agreed upon by AGMI and the respective holder of the
claim for Administrative Expenses. All fees payable to the U.S. Trustee program
shall be paid as they become due. Notwithstanding an assertion by the Class 44
and 45 claimants that their claims are entitled to priority under Section 503(b)
of the Bankruptcy Code, the Class 44 and 45 claims shall be treated under Class
44 and 45 respectively of this Plan and not as Class 40 Administrative Expenses.
In the event that AGMI does not have sufficient cash to pay the administrative
claims in full on the Effective Date, the administrative expense claims will,
with the agreement of the Claimant, be paid from the proceeds of the sale of the
property at Gold Bar or at such date as AGMI has sufficient funds to pay the
claim in full.
3.2 Class 42. Executory Contracts and Unexpired Leases. Class 42 is
--------- -----------------------------------------
comprised of the claims held by parties to unexpired leases or executory
contracts. AGMI, prior to the hearing on confirmation, shall file motions to
assume or reject its unexpired leases and executory contracts subject to the
provisions of 11 U.S.C. (S)365 and notice under Fed. R. Bankr. P. 2002 and 6006.
If AGMI moves to assume the unexpired leases and executory contracts, the claims
shall be treated in accordance with the order of the Court granting the
assumption. Any unexpired leases or executory contracts for which a Motion to
Assume has not been filed by AGMI prior to the hearing on confirmation shall be
deemed rejected. Under the terms of the lease agreements, in the event that a
lease is rejected, the equipment or property will be returned to the lessor,
unless AGMI and the lessor otherwise agree. Any Class 42 claimant asserting a
claim for damages arising from rejection of a lease shall file a proof of claim
with the Bankruptcy Court by the later of the Effective Date or thirty days
after entry of the Order granting the Motion to Reject or the claim shall be
forever barred. The claims held by holders of rejected leases or executory
contracts shall be treated as a Class 49 unsecured claim subject to the
limitations of Section 502 of the Code.
3.3 Class 44. Unimpaired Secured Claims of Bureau of Land Management for
--------- ----------------------------------------------------------
Cleanup obligations associated with the Gold Bar Property. Class 44 is
- ----------------------------------------------------------
comprised of the Allowed secured claims of the Bureau of Land Management for
Cleanup obligations associated with the Gold Bar Property under Plan numbers
N64, 92-003P, N64, 89-004P and 87-008P. The Class 44 claim is secured by Bond
#5661 issued by ACSTAR, the Class 45 claimant and United States Fire Insurance
Company Bond Numbers 6101757263 and 6101757189. The Class 44 claimant and the
Debtor shall retain all rights, without modification, under Plan numbers N64,
92-003P; N64, 89-004P and 87-008P and Bond #5661 issued by ACSTAR, and United
States Fire Insurance Company Bond Numbers 6101757263 and 6101757189. AGMI
believes that the bonds will be sufficient to satisfy the Class 44 claim in
full. To the extent that the bonds are sufficient to pay the allowed claims of
the Class 44 Claimant in full, the Class 44 Claimant is unimpaired. To the
extent that the bonds are insufficient to pay the allowed claims of the Class 44
Claimant in full, the deficiency claims shall be treated as a Class 49 unsecured
claim.
3.4 Class 46. Unimpaired Secured Claims of Norwest Bank. Class 46 is
--------- ------------------------------------------
comprised of Allowed Secured Claims of Norwest Bank of Colorado which issued a
letter of credit in the amount of $750,000 secured by a Certificate of Deposit
for the benefit of United Fire Insurance Company. The value of the Certificate
of Deposit securing the claims of the Class 46
-7-
<PAGE>
creditor is $750,000. The letter of credit has been called and the Class 46
creditor has applied the Certificate of Deposit to the outstanding balance. AGMI
believes that the rights and obligations of the Class 46 creditor have been
satisfied in full. The Class 46 Claimant and the Debtor shall retain all rights,
without modification, under the related documents. The Class 46 Claimant is
unimpaired and any allowed claim shall be paid out of the collateral held by the
Class 46 claimants under the terms of the agreements. The value of the
collateral securing the Class 46 claim is $750,000.
ARTICLE IV
TREATMENT OF CLAIMS IMPAIRED UNDER THE PLAN
-------------------------------------------
4.1 Class 41. Allowed Secured and Unsecured Tax Claims pursuant to 11
-------- -------------------------------------------------------
U.S.C. (S) 507(a)(8). Class 41 is comprised of Allowed Secured and Unsecured Tax
- ---------------------
Claims under U.S.C. (S)507(a)(8) excluding claims for penalties not related to
actual pecuniary loss.
Secured Tax Claims The Class 41 claimants shall retain their prepetition
------------------
liens, if any, on property of the Reorganized AGMI pending payment in full of
the Class 41 secured claims. The Class 41 claimants with secured claims shall
be paid from the proceeds of the sale, joint venture or other agreement related
to the collateral subject to the liens held by the Class 41 creditors the
assets secured by the liens within six years after the date of assessment or the
Class 41 claimants shall be released from the injunction entered upon
Confirmation and shall have the right to pursue its rights and remedies arising
from its prepetition liens under state law.
Unsecured Tax Claims The Class 41 claimants shall receive 100% of their
--------------------
unsecured priority claims with interest at 8% per annum. The Class 41 unsecured
claims shall be paid in full through annual installments within six years from
the date of assessment. Payments to the Class 41 claimants on account of
unsecured claims shall commence within fifteen days after the close of the first
annual anniversary of the Effective Date of the AGMI Plan.
Claims for penalties not related to actual pecuniary loss shall be treated
under Class 51. The allowed amount of any Class 41 claim shall be subject to
determination under Section 505 of the Bankruptcy Code. The Debtor shall file
any requests for determination under Section 505 within sixty days of the
Effective Date of the Plan. Any disputed portion of a Class 41 Claim shall be
treated as a Contested Claim in accordance with the provisions of Article X of
this Plan.
4.2 Class 43. Claims of Gerald E. Davis Class 43 is comprised of the
--------- -------------------------
claims of Davis which arise under the terms of the Settlement Agreement dated
July 9, 1999 between the parties resolving the disputes and claims between Davis
and Atlas raised in the Chapter 11 proceeding and in Adversary Case No. 99-1122
MSK captioned Atlas Corporation, Atlas Gold Mining Inc., and Atlas Precious
Metals, Inc. v. Gerald E. Davis. The claims of Davis shall also be treated as a
Class 13 claim under the Atlas Plan and a Class 29 claim under the APMI Plan.
Davis shall be granted a security interest by Atlas AGMI and APMI in the Davis
Collateral at Gold Bar described herein to the extent of $60,000. The security
interest granted to Davis shall be subordinate to the Class 41 tax claims of
Eureka County and any administrative expenses. If the collateral securing the
claims of the Class 43 creditor has not been sold within five years after the
Effective Date for a value sufficient to pay the Allowed Secured Claims held by
the Class 43 creditor, the injunction shall be lifted as provided herein at
paragraph 6.4.
-8-
<PAGE>
4.3 Class 45a. Allowed Secured Claims of ACSTAR. The Class 45a claims
---------- ---------------------------------
are comprised of the Allowed Secured Claims of ACSTAR which are secured by
certain letters of credit in the aggregate amount of $5,425,000 plus the Escrow
Fund. The ACSTAR Allowed Secured Claims are based upon the ACSTAR Bonds and
ACSTAR Moab Bond in the aggregate amount of $8,290,000 to secure Moab Cleanup
Obligations and Other Cleanup Obligations including the cleanup obligations
owing to the Class 45 claimant under the AGMI Plan. ACSTAR's secured claims
against Atlas, AGMI and APMI are cross collateralized. ACSTAR has drawn on the
letters of credit and is entitled to use the proceeds therefrom in order to pay
the Class 4 creditors under the Atlas Plan and to reimburse itself for the
actual amount incurred under the ACSTAR Bonds for Other Cleanup Obligations
including the cleanup obligations owing to the Class 45 claimant under the APMI
Plan, and its unpaid fees and expenses. Furthermore, any amount remaining from
the Escrow Fund may be used by ACSTAR for the same purposes. To the extent any
funds remain from the Escrow Fund after satisfaction of the Other Cleanup
Obligations secured by the ACSTAR Bonds and any unpaid fees and expenses ACSTAR
has incurred on said Bonds, such funds shall be remitted to the Reorganized
Atlas. ACSTAR shall retain its rights under the escrow agreement. The
foregoing treatment shall constitute satisfaction in full of the Class 45a
Allowed Secured Claim.
4.4 Class 45b. Impaired Unsecured and Administrative Claims of ACSTAR.
---------- -------------------------------------------------------
The Class 45(b) claim is comprised of the unsecured deficiency claim which
ACSTAR has for the Other Cleanup Obligations which it has to pay, and unpaid
fees and expenses in excess of its Class 45(a) Allowed Secured Claim, which
claim shall not exceed $500,000. Any claim by ACSTAR that its claims are
entitled to treatment as a Class 40 Administrative Expense, under any theory,
and any potential claim against ARISUR, shall be waived and released. For
purposes of voting and feasibility the Class 45(b) claim shall be estimated at
$500,000. ACSTAR's unsecured claims against Atlas, AGMI and APMI shall
collectively not exceed $500,000. The claims shall be allocated among the
estates based upon actual damage, with the claim applied first to AGMI, then to
APMI and then to Atlas. The actual amount of the Class 45(b) monetary claim
allowed against AGMI shall be paid as a Class 49 Allowed Unsecured Claim. On
the later of Effective Date of the AGMI Plan or at such time as the Class 45(b)
creditors claim is actually determined, it shall receive in full satisfaction
of its claim a monetary claims equal to the actual amount expended for Other
Cleanup Obligations, plus fees and expenses, not to exceed $500,000, which shall
be treated as a Class 49 unsecured claim and shall receive shares representing
its pro rata share (determined with respect to Class 49 and 50 claimants) of the
outstanding common stock of the Reorganized AGMI; provided that distributions
to the Class 45(b) creditor shall be held by a mutually acceptable escrow agent
pending determination of ACSTAR's responsibility for the Other Cleanup
Obligations . If Bonds #5659, #5660 and #5661 for the Gold Bar property are
terminated without being called and/or there is no unsecured deficiency, the
Allowed Class 45(b) claim shall be $0 and the shares which are being held in
escrow shall remain treasury stock.
4.5 Class 47. Impaired Secured Claims of United States Fire Insurance
--------- -------------------------------------------------------
Company. Class 47 is comprised of the Allowed secured claims of United States
- --------
Fire Insurance Company which issued Bond Numbers 6101757263 and 6101757189 which
were secured by a letter of credit to secure the Debtor's cleanup obligations at
the Gold Bar property. The Class 47 Claimant has called the letter of credit.
The Class 47 claimant and the Debtor shall retain all rights, without
modification, under Bond Numbers 6101757263 and 6101757189 and the proceeds from
the letter
-9-
<PAGE>
of credit. Demand has not been made upon the Bonds, and therefore the claims of
the Class 47 creditor are contingent. To the extent that the Bonds are called
and the proceeds of the letter of credit are insufficient to pay the allowed
claims of the Class 47 Claimant in full, the Class 47 claims are impaired and
the deficiency claims shall be treated as a Class 49 unsecured claim.
4.6 Class 48. Administrative Convenience Class. Class 48 is comprised
--------- --------------------------------
of the claims of unsecured creditors with allowed claims of $1,000 or less and
unsecured creditors holding claims in excess of $1,000 electing to accept $1,000
in full payment of their claims. The Class 48 claims shall be paid in full
without interest on the Effective Date. Creditors wishing to elect to have their
claim treated under Class 48 shall make an election in writing to be received by
undersigned counsel for the Debtor on or before the due date for tendering
ballots to this Plan.
4.7 Class 49. Allowed Unsecured Claims. Class 49 is comprised of the
--------- -------------------------
Allowed Unsecured Claims against AGMI. The Allowed Class 49 creditors shall
receive:
(A) Their pro rata share of the proceeds of from the sale or joint venture
of AGMI's interests in the Gold Bar after payment of costs of sale and
after satisfaction of the Allowed Class 40, 41 and 43 Claims. The funds
shall be distributed on a Pro Rata basis between the Allowed Claims of the
Class 49 and 50 creditors who for shall be treated as one class.
(B) Their pro rata share of the common stock to be issued by the
Reorganized AGMI. The stock shall be distributed on a Pro Rata basis
between the Allowed Claims of the Class 49 and 50 creditors. For purposes
of this distribution, the Class 49 and 50 Creditors shall be treated as one
class.
(C) The Class 49 and 50 claims shall bear interest at the rate of 8
percent per annum from the Effective Date. Interest shall be payable only
if the proceeds of the sale as provided in (A) above are sufficient to pay
the Allowed Class 49 and 50 claims in full.
4.8 Class 50. Claims Held by APMI. Class 50 is comprised of the claims
--------- --------------------
held by APMI other than its claims as an interest holder treated under Class 53.
Class 50 claims arise from an inter-company payable for cash advanced to AGMI.
The allowed claim of AGMI under the Atlas Plan shall first be offset against
AGMI's obligations to APMI which will reduce the accounts receivable owed by
APMI to Atlas. The net Allowed Class 50 Claim shall be treated on a Pro Rata
basis with the Class 49 creditors and shall its pro rata share of the
distributions of proceeds of sale of AGMI's interest in the Gold Bar property
and stock issued by the Reorganized AGMI.
4.9 Class 51. Claims Held by Any Taxing Authority for Penalties Not
--------- -----------------------------------------------------
Related to Actual Pecuniary Loss. The Class 51 Claims are comprised of any
- ---------------------------------
penalty claims held by any taxing authority which are not related to actual
pecuniary loss. The allowed Class 51 claims shall be treated and paid as Class
49 general unsecured claims except the Class 51 claims shall not share in any
distribution of stock of the Reorganized Atlas.
4.10 Class 52. Late Filed Claims. Class 52 is comprised of all late
--------- ------------------
filed claims against AGMI. The Class 52 claims shall be disallowed and shall
receive no distribution under the
-10-
<PAGE>
AGMI Plan unless and until the Class 49 and 50 claims have been paid in full
with interest at 8 percent per annum.
4.11 Class 53. Interests of APMI. Class 53 is comprised of the interests
--------- ------------------
of APMI which holds one-hundred percent of the stock of AGMI. The interests of
the Class 53 interest holder shall be voided. The Class 53 Interest Holder
shall receive no distributions on account of its interests unless and until the
Class 49, and 50 claims have been paid in full with interest at 8% per annum.
ARTICLE V
DEFAULT AND PLAN MODIFICATION
-----------------------------
5.1 In the event of any default by the Reorganized AGMI of any payment to
any class of claimants arising under the terms of the AGMI Plan, the Reorganized
AGMI shall have thirty (30) days within which to cure any default in payments
due under this Plan after the date of issuance of written notice from any claim
holder. Written notice shall be provided to the Reorganized AGMI and to
Debtor's counsel. The notice to Debtor's counsel shall be served upon Sender &
Wasserman, P.C., 1999 Broadway, Suite 2305, Denver, Colorado 80202, unless
written notice of substitution of legal counsel is served upon the claim holder
at least fifteen (15) days prior to the date notice is sent.
5.2 In the event that the Reorganized AGMI fails to cure any default in
the requirements to make payment under the Plan, within forty-five days from the
date that written notice is sent in compliance with paragraph 5.1, the
Reorganized AGMI shall be in default under the terms of the Plan.
5.3 At any time after Confirmation of the Plan but before substantial
consummation of the Plan, the Plan may be modified upon the request of the
Reorganized AGMI, after notice and a hearing, only to the extent allowed by 11
U.S.C. (S) 1127.
ARTICLE VI
MEANS FOR THE IMPLEMENTATION AND EXECUTION OF THE PLAN
------------------------------------------------------
6.1 On or about the Effective Date, all assets of AGMI shall be
transferred to the Reorganized AGMI free and clear of all liens, claims, and
interests of creditors, equity holders, and other parties in interest, except as
otherwise provided herein. Specifically, the assets shall be transferred
subject to the liens held by the Class 43, secured creditor and any Class 41
creditor with perfected liens. The Class 44, 45(a) 46 and 47 creditors shall
retain the collateral securing their claims. The Reorganized AGMI shall not,
except as otherwise provided in this Plan, be liable to repay any debts which
accrued prior to the Confirmation Date. Except as provided in this AGMI Plan,
on the Confirmation Date AGMI shall be granted a discharge under 11 U.S.C. (S)
1141.
6.2 On the Effective Date, AGMI shall begin implementing its Plan of
Reorganization pursuant to the terms for each class of claimants set forth above
under III and IV above. All payments under the AGMI Plan shall come from the
cash held by the Reorganized AGMI or
-11-
<PAGE>
proceeds of the sale of its interests in the Gold Bar property after costs of
sale. The Class 40 administrative expenses may be paid from advances by the
Reorganized Atlas.
6.3 The Reorganized AGMI shall distribute the proceeds from the sale,
joint venture or other agreement compensating AGMI for its interests in the Gold
Bar property, after payment of costs, in order of priority as established in
Sections III and IV above within fifteen days after the close of the calendar
quarter in which the proceeds were received.
6.4 If the Allowed Secured Claims secured by AGMI's interests in the Gold
Bar property has not been satisfied through the sale, joint venture, exploration
agreement or other agreement with respect to the property, by the five year
anniversary of the Effective Date, the injunction precluding action against AGMI
and its assets shall be lifted as of the first business day after the five year
anniversary of the Effective Date and the holders of Allowed Secured Claims
shall be entitled to pursue their state court remedies against the collateral
securing their claims.
6.5 The stock to be issued by the Reorganized AGMI to the Allowed Claims
of the Class 49 and 50 creditors shall be issued within 90 days after the
Effective Date. In determining the Pro Rata share to be distributed to
Contested Claims under Article X, the shares shall be reserved as if the
Contested Claims were allowed in full and held by the Reorganized AGMI pending
resolution of the dispute. If AGMI' objections to the claims are sustained by
Final Order, the shares shall not be issued.
6.6 The Reorganized AGMI may pursue any claims or recovery actions held
by AGMI, including but not limited to recovery under 11 U.S.C. (S)(S)544, 547,
548 and 549. The Reorganized AGMI may abandon any claim AGMI has against any
third party if it determines that the claim is burdensome or of inconsequential
value and benefit. The Reorganized AGMI is authorized to employ counsel to
represent AGMI in the litigation or any cause of action or claims held by AGMI.
6.7 All funds held by the Reorganized AGMI for distribution under the
AGMI Plan shall be held in accounts which meet the insurance and guaranty
requirements 11 U.S.C. (S)345(b).
6.8 Following the Effective Date, the Reorganized AGMI may compromise
objections to Claims or causes of action referred to in this AGMI Plan without
notice and hearing for claims or causes of action asserted in the original
amount of $5,000 or less. Settlements or compromises of any claims or causes of
action asserted in the amount of $5,000 or more shall be subject to notice and
an opportunity for hearing under the provisions after notice in compliance with
the Local Rules of Bankruptcy Procedure.
6.9 After the Effective Date, the Reorganized AGMI exercising its
business judgment may sell, operate or abandon any of its assets.
6.10 AGMI shall receive a discharge only to the extent permitted by 11
U.S.C. (S) 1141 and AGMI shall be entitled to seek injunctive relief from the
Court, if necessary, to enforce any and all provisions of the Plan.
-12-
<PAGE>
ARTICLE VII
CRAM DOWN
---------
7.1 If all of the applicable requirements for confirmation of the AGMI
Plan are met as set forth in 11 U.S.C. (S) 1129(a)(1)-(11) except Subparagraph
(8), AGMI (subject to the acceptance of the AGMI Plan by at least one class
which is impaired) hereby requests the Court confirm the AGMI Plan pursuant to
11 U.S.C. (S) 1129(b), notwithstanding the requirements of Subparagraph (8), as
the AGMI Plan is fair and equitable and does not discriminate unfairly with
respect to any dissenting, impaired class.
ARTICLE VIII
GENERAL PROVISIONS
------------------
8.1 The Reorganized AGMI shall be vested with ownership to all property of
AGMI upon the Effective Date, subject to the provisions of this Plan.
8.2 The payment of Allowed Administrative Claims and Allowed Secured
Claims shall be in exchange for all claims against AGMI and the Reorganized AGMI
and shall constitute full settlement, release, discharge, and satisfaction of
all such claims against AGMI and the Reorganized AGMI.
8.3 Nothing herein contained shall prevent AGMI from taking any action as
may be necessary to the enforcement of any cause of action which may exist on
behalf of AGMI and which may not have been enforced or prosecuted by AGMI prior
to the Effective Date.
8.4 AGMI reserves the right to modify the Plan prior to the Confirmation,
and thereafter to modify the Plan in accordance with 11 U.S.C. (S) 1127(b) and
(P) 5.2 hereunder.
8.5 AGMI reserves the right to reopen the Chapter 11 case after
Confirmation and dismissal for the purposes set forth in Article XII.
8.6 To the extent that the provisions of the Disclosure Statement are
inconsistent with the provisions of this Plan, the provisions of this Plan shall
control.
8.7 AGMI' obligation to pay the quarterly fees owing to the Office of the
United States Trustee pursuant to 28 U.S.C. (S)1930(a)(6) is a continuing
obligation which does not terminate until the Bankruptcy Case is dismissed or
converted.
-13-
<PAGE>
ARTICLE IX
PROVISION FOR ASSUMPTION OR REJECTION OF
----------------------------------------
EXECUTORY CONTRACTS
-------------------
9.1 All unexpired leases and executory contracts between AGMI and any
other party which have not prior to the Effective Date of the AGMI Plan been
affirmatively assumed by AGMI by the filing of an appropriate motion are hereby
rejected.
ARTICLE X
PROVISION AS TO CONTESTED CLAIMS
--------------------------------
10.1 AGMI or the Reorganized AGMI may, at any time within ninety (90) days
after the Effective Date file an objection to any claim which in its opinion
should be objected to as improper, in whole or in part, regardless of whether
the claim was scheduled as disputed, contingent or unliquidated. AGMI may
further designate claims held by creditors against whom they believe actions may
be brought under Sections 544, 547, 548 or 549 of the Bankruptcy Code as
Contested Claims by sending notice in writing to the Claimant within sixty (60)
days after the Effective Date.
Upon the filing of such objection or service of said written notice, such
claim shall be considered a Contested Claim, and any cash or other instruments
or property otherwise distributable to such creditor under this AGMI Plan shall
be held by AGMI in escrow until final disposition of the objection to the claim
either by settlement or entry of a Final Order. If the claim is only contested
in part, payment shall be made to the claimant on the uncontested portion under
the provisions of Article IV and the balance shall be treated as a Contested
Claim under the provisions of Article X. If the objection is overruled or
denied, in whole or in part, or the claim is allowed by stipulation of AGMI and
the claimant, such claimant shall receive the amount of cash or property
provided in this AGMI Plan to the extent of the amount of the claim finally
allowed, including back installments.
10.2 From and after the Effective Date, the Reorganized AGMI shall reserve
and hold for the benefit of each holder of a Contested Claim cash in an amount
equal to the Pro Rata payments which would have been made to the holder of such
contested claim if it were an Allowed Claim in an amount equal to the lesser of:
(i) the amount of the Contested Claim or (ii) the amount in which the Contested
Claim shall be estimated by the Bankruptcy Court pursuant to (S) 502 of the
Bankruptcy Code for purposes of allowance, which amount shall constitute and
represent the maximum amount in which such claim may ultimately become an
Allowed Claim. No payments or distributions shall be made with respect to all
or any portion of any Contested Claim pending the entire resolution thereof by
Final Order.
-14-
<PAGE>
ARTICLE XI
AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS OF DEBTOR
-----------------------------------------------------------
AND STOCK INCENTIVE PLAN
------------------------
11.1 As may be required, the Articles and Bylaws of AGMI shall be amended
on or before the Effective Date to the extent necessary to effectuate the
provisions of the AGMI Plan, including but not limited to, reincorporating the
Reorganized AGMI under the laws of the State of Colorado, voiding its existing
common stock and issuing new common stock in compliance with the provisions of
this AGMI Plan. No fractional shares of stock shall be issued.
11.2 Board of Directors and Annual Shareholders Meeting.
The current Board of Directors shall serve until the next annual or special
meeting of shareholders, called in accordance with the Bylaws. At the annual or
special meeting, the shareholders shall elect a new Board of Directors.
ARTICLE XII
RETENTION OF JURISDICTION
-------------------------
The Court shall retain jurisdiction over this Chapter 11 case and related
core and non-core proceedings, for the following purposes:
12.1 To hear and determine any and all objections to the allowance of
claims or interests.
12.2 To determine any and all applications for allowances of compensation
and reimbursement of expenses and any other fees and expenses authorized to be
paid or reimbursed under the Code or the Plan.
12.3 To hear and determine any and all pending applications for the
rejection or assumption, or for the assumption and assignment, as the case may
be, of executory contracts or unexpired leases to which AGMI is party, and to
hear and determine any and all claims arising therefrom.
12,4 To hear and determine any and all applications, adversary
proceedings, and contested or litigated matters that may be pending on the
Effective Date or that AGMI may bring subsequent to the Effective Date or to
which AGMI may be made a party.
12.5 To consider any modifications of the AGMI Plan, to remedy any defect
or omission or reconcile any inconsistency in the AGMI Plan or in the orders of
the Bankruptcy Court, including the Order of Confirmation.
12.6 To hear and determine any request under Fed. R. Bankr. P. 2004 to
allow AGMI to complete any pending investigation as to potential assets or
liabilities.
-15-
<PAGE>
12.7 To hear and determine all controversies, suits, and disputes that
may arise in connection with the interpretation, enforcement, or consummation of
the AGMI Plan, including any disputes between the plan proponents.
12.8 To consider and act on the compromise and settlement of any claim or
cause of action by or against AGMI.
12.9 To issue orders in aid of execution of the AGMI Plan as contemplated
by (S) 1142 of the Code.
12.10 To determine such other matters as may be set forth in the Order of
Confirmation or which may arise in connection with the Plan or the Order of
Confirmation.
Dated this ______ day of September, 1999.
Respectfully submitted,
DEBTORS:
Atlas Gold Mining Inc.
By: /s/ Gregg Shafter
-------------------------------
Gregg Shafter, President
SENDER & WASSERMAN, P.C.
By: /s/ Gregg Shafter
-------------------------------
Harvey Sender, #7546
John B. Wasserman, #10011
Bonnie A. Bell, #14923
Daniel J. Garfield, #26054
1999 Broadway, Suite 2305
Denver, Colorado 80202
(303) 296-1999 Telephone
(303) 296-7600 Facsimile
E-mail: [email protected]
ATTORNEYS FOR DEBTOR
-16-
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<PAGE>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 464
<SECURITIES> 0
<RECEIVABLES> 1,437
<ALLOWANCES> 0
<INVENTORY> 758
<CURRENT-ASSETS> 2,768
<PP&E> 59,262
<DEPRECIATION> (47,499)
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<CURRENT-LIABILITIES> 5,198
<BONDS> 0
0
0
<COMMON> 279
<OTHER-SE> (4,476)
<TOTAL-LIABILITY-AND-EQUITY> 35,170
<SALES> 1,297
<TOTAL-REVENUES> 1,334
<CGS> 1,450
<TOTAL-COSTS> 1,747
<OTHER-EXPENSES> 94
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88
<INCOME-PRETAX> (595)
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