Mirabela proposes survival plan
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Mirabela Nickel has proposed a complex restructuring that involves placing the company into administration, raising new capital and implementing a debt-for-equity swap that will leave current shareholders owning just a small fraction of the embattled mining company.
Mirabela announced today that KordaMentha partners Martin Madden, Cliff Rocke and David Winterbottom have been appointed voluntary administrators.
It described the appointment as an “important and necessary mechanic” in progressing the planned recapitalisation.
Mirabela said it had the full support of the ‘ad hoc group’ of lenders who hold $US395 million of unsecured notes and have entered a legally binding ‘plan support agreement’.
The company’s operations at the Santa Rita nickel mine in Brazil are planned to continue while the restructure is implemented, albeit with lower production volumes.
Under the terms of the debt-for-equity swap, holders of the unsecured notes will end up with 54.4 per cent of the ordinary shares of Mirabela after the reorganisation.
The company plans to raise $US110 million of new capital through the issue of five-year convertible notes, paying 9.5 per cent interest per annum.
These will be convertible into 42.3 per cent of Mirabela’s ordinary shares.
Of the $US110 million of new capital, $US60 million will be from the conversion of debts held under a syndicated note subscription deed.
Mirabela said certain members of the ‘ad hoc group’ had agreed to “backstop” the balance of $US55 million of new capital.
The company and the ‘ad hoc group’ evaluated other alternatives, including the sale of a controlling interest to another stakeholder in the company, but determined that “no other alternative provided a greater potential recovery to creditors than the proposed recapitalisation”, according to a Mirabela statement.
“Although the ad hoc group firmly believes that the implementation of the proposed recapitalisation is feasible, there is no assurance that it will be concluded,” the statement said.