SYDNEY: Australian iron ore miner Atlas Iron Ltd said it has agreed a far-reaching debt restructuring that will hand its lenders 70% of the company’s stock as it struggles to stay afloat.
Under the proposed deal, the company’s so-called Term Loan B lenders would retire US$132mil in debt, cutting Atlas’s debt load to US$135mil from US$267mil.
In exchange, the lenders would be issued shares and options giving them 70% of the shares and options on issue.
Oversupply and a slowing economy in top consumer China have hit iron ore markets hard, piling pressure on smaller Australian producers such Atlas, BC Iron and Arrium Ltd.
Atlas is Australia’s fourth-largest iron ore miner, although collectively the minnows mine less than 10% of the country’s annual 700 million tonnes of sea-traded iron ore and they have suffered the most from weak demand from China.
Atlas posted a A$1.38bil loss for 2014/15 after it took A$1.01bil in impairment charges and writedowns following a restructuring and capital raising earlier in the year in order to get its mines back in operation.
The miner had been forced suspend production at its three mines in April, but resumed operations between May and July.
Iron ore stood at $40.20 a tonne yesterday, according to the Steel Index, compared with highs above US$190 a tonne in 2011. — Reuters
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