Atlas Iron proposes debt-restructuring deal

PERTH (miningweekly.com) – Iron-ore miner Atlas Iron has appealed to shareholders to vote in favour of a debt restructuring agreement, with chairperson Cheryl Edwardes warning on Monday that the company was facing voluntary administration should the deal not be approved.

Atlas shareholders were set to meet on April 27 to vote on a debt restructuring plan agreed with more than 75% of the company’s term loan B (TLB) lenders, and the amendment of its existing syndicated facility agreement.

Under the two agreements, Atlas would pay down $10-million of the TLB loan and issue shares and options to the TLB lenders in exchange for retiring $132-million of debt and extending the maturity of the remaining $135-million debt from December 2017 to April 2021.

The TLB lenders would hold a combined 70% of the company’s shares and options on issue, immediately post the restructure.

“The board is confident that this deal is necessary if we are to secure a strong future for Atlas, giving our company added resilience to withstand iron-ore price volatility and maximising its potential to once again generate strong returns for shareholders,” Edwardes said on Monday.

“Your directors believe that this restructuring plan is in shareholders’ best interest and they are strongly of the view that there is a high risk Atlas will be placed into voluntary administration should the deal not proceed.”

Edwardes said that independent expert PPB Advisory shared the view.

“Your directors understand the frustration and even disappointment which shareholders have felt since the sharp falls in the iron-ore price left the company in a difficult financial position.

“We also appreciate that many shareholders will be extremely disappointed at the prospect of their investment being further diluted by the issue of shares and options to the lenders as part of the restructuring deal. However, given the potentially dire consequences for Atlas and its shareholders should the deal not be approved, I strongly encourage you not to post a protest vote, either by abstaining or by voting against the proposed deal,” Edwardes said in a letter to shareholders.