PERTH, AUSTRALIA, Oct. 23, 2013 /CNW/ - Mirabela Nickel Limited (Mirabela or the Company) (ASX: MBN) wishes to advise that Standard and Poor's Ratings Services
(S&P) lowered the Company's corporate credit rating from 'CCC+' to SD
(Selective Default). The Company provides the attached Press Release
Mirabela Nickel Ltd. Downgraded To 'SD' After Missed Interest Payment;
Issue Rating Lowered To 'D'
MELBOURNE (Standard & Poor's) Oct. 23, 2013—Standard & Poor's Ratings
Services said today that it has lowered its corporate credit rating on
Australian nickel mining company Mirabela Nickel Ltd. to 'SD' from
'CCC+'. We also lowered the issue credit rating on the US$395 million
8.75% notes to 'D' from 'CCC+'. At the same time, the ratings were
removed from CreditWatch with negative implications, where they were
placed on Oct. 2, 2013.
The rating actions stem from Mirabela's announcement that it did not
make the interest payment of about US$17.3 million on its 8.75% senior
notes, which was scheduled to be paid on Oct. 15, 2013. This nonpayment
would only constitute a default under the terms of the notes if it is
not remedied within the 30-day grace period that will end by November
"At this stage, we are uncertain about Mirabela's willingness to make
the payment within the grace period, although we believe that it
currently has sufficient cash to meet that obligation," said Standard &
Poor's credit analyst Thomas Jacquot. "The company had about US$80
million of cash at the end of August 2013."
On September 27, Mirabela announced that one of its two offtakers,
Votorantim Metais Niquel S.A. (Votorantim) had served notice to the
company of its intention to terminate its offtake agreement at the end
of November. The agreement was scheduled to expire at the end of 2014.
As Mirabela has a US$50 million loan from Banco Bradesco S.A.
(Bradesco) that is secured on the Votorantim receivables, termination
of the offtake agreement could lead to a default under the Bradesco
loan which, if not remedied, could lead to a cross default under the
US$395 million notes.
Subsequently on October 18, Mirabela announced that the termination
notice served by Votorantim was invalid and that Votorantim would honor
its obligations as originally envisaged, although Mirabela expects
Votorantim to purchase only a small proportion of the mine's output.
This announcement would indicate that the likelihood of an immediate
default under the Bradesco loan and potential subsequent cross default
under the notes had reduced. However, the company subsequently
announced, on October 22, that it has not paid the interest due on the
Mr. Jacquot added: "We consider a missed interest payment as a default
when the nonpayment has occurred and is continuing for at least five
business days from the scheduled payment date. This is even though a
payment default has not occurred according to the legal provisions of
Mirabela's notes, which incorporate a 30-day grace period."
The company has indicated its intention to provide a further update to
the markets by the end of October. Should the interest payment remain
unpaid by Nov. 15, 2013, we would expect to lower the corporate credit
rating on Mirabela to 'D'. Any potential upward movement on the rating
above 'SD' is uncertain at this stage, both in terms of likelihood and
RELATED CRITERIA AND RESEARCH
Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings, Oct. 1,
General Criteria: Timeliness of Payments: Grace Periods, Guarantees, And
Use Of 'D' And 'SD' Ratings, Dec. 23, 2010
2008 Corporate Criteria: Analytical Methodology, April 15, 2008
2008 Corporate Criteria: Rating Each Issue, April 15, 2008
Richard Noonan; email@example.com; 613 9631 2152
Thomas Jacquot, firstname.lastname@example.org
May Zhong, email@example.com
Standard & Poor's Ratings Services, part of McGraw-Hill Financial
(NYSE: MHFI), is the world's leading provider of independent credit risk
research and benchmarks. We publish more than a million credit ratings
on debt issued by sovereign, municipal, corporate and financial sector
entities. With over 1,400 credit analysts in 23 countries, and more
than 150 years' experience of assessing credit risk, we offer a unique
combination of global coverage and local insight. Our research and
opinions about relative credit risk provide market participants with
information and independent benchmarks that help to support the growth
of transparent, liquid debt markets worldwide.
Standard & Poor's (Australia) Pty. Ltd. holds Australian financial
services licence number 337565 under the Corporations Act 2001.
Standard & Poor's credit ratings and related research are not intended
for and must not be distributed to any person in Australia other than a
wholesale client (as defined in Chapter 7 of the Corporations Act).
SOURCE: Mirabela Nickel Ltd.
For further information:
Mirabela Nickel Limited
+61 8 9324 1177