Kumtor Gold’s Chapter 11 bankruptcy case dismissed by court

By Sarah Lizee

Olympia, Wash., July 28 – Kumtor Gold Co. CJSC’s Chapter 11 bankruptcy case was dismissed on Wednesday by the U.S. Bankruptcy Court for the Southern District of New York, according to court documents.

As previously reported, the company informed the court in May that it would seek the dismissal.

In an April news release, the debtor’s parent company, Centerra Gold Inc., said it had entered into a global arrangement agreement with Kyrgyzaltyn JSC and the government of the Kyrgyz Republic.

Under the agreement, Centerra will receive all its common shares held by Kyrgyzaltyn, representing a roughly 26% equity interest in Centerra, for a total purchase price of about C$972 million. Then Centerra will cancel the shares surrendered.

Kyrgyzaltyn will receive a 100% stake in the company’s two Kyrgyz subsidiaries, Kumtor Gold and Kumtor Operating Co. CJSC, and, indirectly, the Kumtor Mine, and a cash payment of about $36 million, in satisfaction of the purchase price for Kyrgyzaltyn’s Centerra common shares.

About $25 million of the cash payment will be withheld by Centerra and remitted to the Canadian tax authorities on account of Canadian withholding tax payable by Kyrgyzaltyn on the share exchange and the balance of the cash payment of about $11 million will be paid to Kyrgyzaltyn on closing of the arrangement.

The Kyrgyz Republic and Kyrgyzaltyn will assume all responsibility for the Kumtor Mine, including all reclamation obligations.

Kumtor Gold agreed to work together with the Kyrgyz Republic to petition the court to dismiss the Chapter 11 proceedings, effective as of the closing of the arrangement.

Centerra will end the intercompany balance between Centerra and Kumtor Gold by paying $50 million to Kumtor Gold on closing of the arrangement and, as to the balance, through an offsetting dividend to be declared by Kumtor Gold immediately prior to closing.

Bishkek, Kyrgyzstan-based Kumtor Gold is owned by Toronto-based Centerra Gold, a mining and exploration company. The Chapter 11 case number of Kumtor Gold is 21-11051. It filed bankruptcy on May 31, 2021.

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