WGI Heavy Minerals Announces Revaluation of Certain Long-lived Assets and Reduction of Board of Directors

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[{"type":"text","content":"\n\n\n\nCOEUR D'ALENE, ID, Feb. 27 /CNW/ - WGI Heavy Minerals, Incorporated (WGI)\n(TSE: WG) today announced that it is nearing the completion of an internal\nreview which has resulted in the revaluation of certain assets with respect to\nthe operations of two of its subsidiaries, Emerald Creek Garnet ("ECG") and\nInternational Waterjet Parts ("IWP").\n\n\nThe Company tested the value of its assets using current information and\ndetermined the carrying value of its long-lived assets at ECG and IWP exceeded\nthe discounted cash flows expected from each specific operation. The Company\nintends to write down ECG and IWP's long-lived assets to their estimated fair\nvalue which the Company currently anticipates being close to US$1 million\neach. The current total fair value reductions of these operations, which\nreflect significant adverse fourth quarter 2008 market developments, are\nexpected to have an estimated net income impact of approximately US $2.75\nmillion in the fourth quarter of 2008. There will be no negative impact to\nworking capital.\n\n\n2008 saw a change in the strategic direction of WGI. The second half of\nthe year will be remembered for turmoil across world markets, and\ndeteriorating economic conditions continuing into 2009. Some of the\nsignificant events and activities that occurred at WGI over the past year\nwere:\n\n\nSale of Transworld Garnet India Pvt. Ltd ("TGI")\n------------------------------------------------\n\n\nWGI sold its production assets in India to VV Minerals for net proceeds\nof US$15.56 million. The Company subsequently reported a gain of US$10.69\nmillion in the third quarter. As part of the VV sale, WGI negotiated and\nentered into a three-year distribution agreement with VV Minerals for the sale\nof garnet, ilmenite and other industrial minerals. WGI has repatriated from\nIndia US$4.85 million in cash for its 74% equity interest in TGI. In addition,\nWGI has repatriated US $10.22 million in debt financing by obtaining repayment\nof certain external commercial borrowings ("ECB loans") from TGI. Rs 17.67\nmillion of the net proceeds remain in a special purpose account with the\nCentral Bank of India ("CBI") to be repatriated pending CBI's receipt of the\nReserve Bank of India's approval to repatriate the funds. The relationship\nbetween the ...

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