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