Court orders Sallies to pay Honeywell $1.4m
April 9, 2009
By Justin Brown
The International Chamber of Commerce International Court of Arbitration has ruled that mining group Sallies should pay Honeywell International $1.4 million (about R13.2 million).
The arbitration resulted from Sallies cancelling a contract with Honeywell in 2006. Sallies had R12 million in cash on its books at the end of December.
Yesterday Sallies welcomed the decision, saying it removed a long-standing risk that had been hanging over the business.
Tom Dale, the chief executive of Sallies, said the firm was disappointed that any award was made to Honeywell, but he was pleased that the size of the exposure had been reduced and quantified.
"We are studying the detailed, 59-page award document and formulating our response," said Dale.
"Our own legal and other costs have been fully accounted for and declared in audited and reviewed financial statements, but … no provisions have been made for either the award or interest.
"The company is exploring various settlement options and remains in a sound liquidity position." Sallies was not planning either a rights issue or raising of debt to settle the Honeywell claim, he added.
The company said each party would bear its own legal and other costs. Honeywell had originally claimed $6.8 million plus interest and costs from Sallies, but instead it filed an alternative claim of $4.5 million plus interest and costs.
Sallies opposed the claim and submitted a counterclaim of $3.8 million plus interest and costs.
Last month Sallies reported an interim loss after tax of R62 million as a result of the impairment of its Buffalo mine. The loss widened from R26 million in the half-year to December 2007.
Its remaining operating asset is the Witkop fluorspar mine in North West, which posted an operating profit of R46 million in the six months to December, compared with a previous loss of R12 million.
Sallies shares added 7.14 percent to 30c yesterday. The mining sector rose 0.3 percent.
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