Crystallex noteholders claim change of control and resulting put right

By Angela McDaniels

Tacoma, Wash., June 1 - Crystallex International Corp. said some holders of its $100 million of 9 3/8% senior notes due Dec. 23, 2011 are pursuing legal action in order to put back their notes.

The noteholders are seeking a court declaration that there has been a project change of control that would allow them to put back the notes at 102% of par, according to a company news release.

The company defined a project change of control as the occurrence of any transaction that results in it ceasing to beneficially own, directly or indirectly, at least a majority interest in the Las Cristinas project asset.

Crystallex said it has successfully defended multiple actions by the noteholders before, and it intends to "vigorously defend" itself against this application as well.

Some noteholders claimed in December 2008 that a project change of control had happened. In December 2009, the Ontario Superior Court of Justice dismissed all of the noteholders' claims against Crystallex and ordered the noteholders to pay Crystallex's legal costs.

That noteholder group appealed the decision. In May 2010, their appeal was dismissed.

According to the company's annual report for 2010, it is negotiating a restructuring of the notes and will seek refinancing opportunities with other parties if the negotiations are not successful.

Crystallex is a Toronto-based mining company.

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