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Stephen W. Seifert <br /> January 13, 1993 <br /> Page 8 <br /> understanding is that there are no unpaid Costs of the Work. The <br /> interest and upset fee on Cost of the Work would total several <br /> hundred thousand dollars. <br /> In subsequent discussions between Resources and <br /> Boswell, Resources has agreed that the proceeds from the 160 acre <br /> parcel would be credited to the $6 million purchase price. The <br /> effect of the transaction would be to yield $6 million to <br /> Resources, less M&E's Cost of the Work, commissions, interest and <br /> upset fee, and less commissions paid to the broker on the 160 <br /> acre parcel. This nonetheless would compare favorably with the <br /> $4 , 684 ,000 liquidation net estimated earlier in this letter, <br /> which is only an estimate (which could yet prove optimistic) and <br /> would be realized only over a period of several years . <br /> The current status of the negotiations with Boswell are <br /> summarized in Bob Delaney's letter of January 6 to Boswell, a <br /> copy of which is enclosed. You will see that the main focus of <br /> contention continues to be Resources ' demand that Redstone escrow <br /> cash or negotiable securities as a condition to suspending the <br /> M&E contract and submitting the sale to the Bankruptcy Court for <br /> approval. Delaney is meeting with Boswell on January 14 to see <br /> if this demand can be satisfied. <br /> Because of the potential impact on the reclamation <br /> issues and the net distribution to secured and unsecured <br /> creditors, I anticipate that your clients may want to defer <br /> negotiations regarding a division of the liquidation pot for a <br /> short period of time, while we see whether Redstone is willing <br /> and able to come up with the funds necessary to go forward. In <br /> the meantime, and on the assumption that nothing comes of the <br /> Boswell discussions, Resources will attempt to further refine its <br /> estimates of the cost of reclamation and the net realization from <br /> the current liquidation program. <br /> Chapter 11 Plan <br /> As you know, Resources has been recommending that the <br /> three principal creditor groups agree on a division of the <br /> liquidation pot. Such an agreement would form the basis for a <br /> liquidating Chapter 11 plan. The division of liquidation <br /> proceeds incorporates many of the points made in this letter. <br /> First, Sanwa and the unsecured creditors would agree to <br /> augment the MLRD's secured position through the granting of a <br /> lien on the mine site and load out facility. In exchange, the <br />