Australian-listed Celsius Resources Ltd. is seeking to block the auction of its 40% stake in Makilala Mining Co. Inc. (MMCI) after a Makati court denied its petition to stop foreclosure proceedings involving its interest in the Maalinao-Caigutan-Biyog (MCB) copper-gold project in Kalinga.
In a corporate update, Celsius said the Regional Trial Court of Makati City denied the petition for interim protection filed by its subsidiary, Makilala Holding Limited (MHL), which sought to prevent the foreclosure or sale of its MMCI shares pending arbitration with Equinaire Holdings Ltd.
The court ruled that MHL had not sufficiently demonstrated the existence of “irreparable injury” that would warrant an injunction, reasoning that potential losses from a foreclosure would primarily be financial and could be addressed through arbitration.
However, the court clarified that its decision did not establish that a loan default had occurred, that any default was incurable, or that Equinaire had the right to foreclose on the shares. These issues remain subject to determination by the arbitral tribunal.
The ruling effectively allows Equinaire to proceed with foreclosure and the scheduled auction while the underlying dispute remains unresolved.
Auction set for September 8
According to Celsius, a temporary order of protection had previously barred Equinaire from foreclosing on or auctioning MHL's stake in MMCI.
The order was lifted on August 27 after Equinaire posted a ₱201-million counterbond with the court. Equinaire subsequently issued notices resuming foreclosure proceedings and setting September 8 as the auction date for MHL's 40% interest in MMCI.
Under the bidding rules, the minimum bid is set at US$5 million, with Equinaire retaining the right to match the highest offer.
Celsius questioned the terms, noting that a recently completed definitive feasibility study valued the entire MCB project at approximately US$770 million.
The company also disputed Equinaire's claims of default, which initially centered on a notice of relinquishment issued by MHL to Sodor Inc. after the latter allegedly failed to pay for its 60% interest in MMCI.
Celsius said Equinaire had since cited two additional alleged breaches involving unspecified information-security incidents affecting MMCI and MHL's move to seek court protection.
Celsius maintains that no event of default has occurred or remains outstanding and argues that Equinaire has not satisfied the contractual requirements to enforce its security rights.
Dispute over Maharlika loan transfer
The foreclosure dispute stems from the transfer of Maharlika Investment Corp.'s (MIC) US$10-million bridge loan to MMCI to Equinaire, a special-purpose subsidiary of India's Kiri Industries Ltd., according to Celsius.
The company questioned MIC's decision to assign the loan to Equinaire, particularly given Kiri's existing involvement as an equity investor in the MCB project.
Celsius also raised concerns about Equinaire's financial capacity and corporate standing, arguing that the transfer could put its 40% stake in the Philippine mining venture at risk.
MIC President and Chief Executive Officer Rafael Consing Jr. has previously said the state-run investment corporation's exposure was capped at US$10 million and that it had fully exited the financing arrangement after assigning the loan to Equinaire.
The circumstances surrounding the loan transfer and the validity of the assignment remain among the issues Celsius intends to challenge through arbitration.
Celsius to seek reconsideration
Celsius said it plans to file a motion for reconsideration before the Makati court and appeal to the Court of Appeals if the motion is denied.
The company is also revising its notice of arbitration to formally initiate proceedings, where it intends to contest the substantive issues surrounding the dispute, including the validity of MIC's assignment of the loan to Equinaire.
Celsius further noted that any transfer of MMCI shares would require a Certificate Authorizing Registration or applicable tax clearance from the Bureau of Internal Revenue before the transaction could be registered with the Securities and Exchange Commission.
According to the company, the process typically takes at least 27 working days, potentially giving it additional time to pursue legal remedies.
The dispute over the MCB copper-gold project remains unresolved, with the validity of the alleged default and Equinaire's foreclosure rights yet to be determined through the appropriate legal proceedings.
