PERTH, AUSTRALIA, Oct. 31, 2013 /CNW/ - Mirabela Nickel Limited (Mirabela or the Company) (ASX: MBN) encloses its quarterly activities report and provides the
As previously announced Mirabela is continuing to explore opportunities
for new strategic, financing and off-take alternatives and is in
ongoing discussions with its key stakeholders. As part of this
process, the Company has engaged in discussions with its key
financiers, including a group of holders that represent a majority of
the approximately US$395 million of 8.75% senior unsecured notes due
2018 (Notes) and their legal and financial advisors.
The Company and its stakeholders are actively discussing potential ways
of restructuring Mirabela's debt to reduce the burden on the Company.
However, any restructuring of Mirabela's debts is complex as the
Company and its advisors are required to deal across legal, financial,
commercial and operational frameworks in three jurisdictions, being
USA, Australia and Brazil. Accordingly, any potential restructuring
transaction will have a high level of execution risk.
In order to give the Company the best chance of achieving a successful
restructuring of its debt, Mirabela is currently discussing standstill
arrangements with its financiers, including the Noteholders, to whom an
interest payment of US$17.3 million was due on 15 October 2013 (see ASX
announcement dated 22 October 2013). If standstill arrangements with
the Company's creditors are not achieved before 13 November 2013 and
the interest payment on the Notes is not made, an event of default may
be triggered pursuant to the indenture relating to the Notes and
cross-defaults may also be triggered in the Company's other debt
facilities. Although the Company currently has sufficient cash to make
the outstanding interest payment on the Notes, such payment would
reduce the Company's ability to fund its operations during any debt
restructuring process. In such circumstances, the Company's Board would
need to consider the options available to protect the Company's assets,
including the appointment of an administrator.
Given the ongoing challenging nickel market conditions and the Company's
current cash burn (cash on hand as at 29 October 2013 was US$53.7
million, compared to US$108.1 million at 30 June 2013) it is essential
for Mirabela's continued financial viability that any restructuring of
its debt is paired with a transaction involving a capital injection.
The Company continues to assess its options in this regard and is in
discussions with potential financiers.
Mirabela is also in the process of reviewing its customer arrangements
given the situation with one its two customers, Votorantim Metais
Niquel S.A. (Votorantim). The Company has commenced initial discussions with other potential
off-take parties for the 50% of production Votorantim was buying. The
negotiation of off-take arrangements presents additional challenges for
Mirabela as it is possible that in the current nickel market
conditions, the pricing in any new contract may be less than that paid
by the Company's current counter-parties.
The Company has engaged the following advisors to assist in the
Sidley Austin as U.S. legal counsel
Hardy Bowen Lawyers and Herbert Smith Freehills as Australian legal
Pinheiro Neto Advogados as Brazilian legal counsel
Ferrier Hodgson as financial advisors
Houlihan Lokey as U.S. restructuring advisors
Currently, no binding agreements have been concluded nor has any
opportunity or arrangement sufficiently progressed to be announced to
the market. No assurance can be given at this stage that any definitive
agreements or arrangements will be reached with any party that the
Company may be in discussions with.
Mirabela has remained in voluntary suspension since 9 October 2013 as
its Board is of the view that continued trading in its securities is
likely to be materially prejudicial to its ability to successfully
complete a complex transaction that is critical to its continued
In accordance with ASX Guidance Note 8, as the Company is subject to a
longer term suspension, it intends to implement a system of monthly
disclosure to ensure the market and security holders are provided with
regular updates as to its status.
SOURCE: Mirabela Nickel Ltd.
For further information:
Mirabela Nickel Limited
Telephone: +61 8 9324 1177