From Fairfax:
Loss-making iron ore miner Atlas Iron has been granted some breathing space by most of its debtors, who have agreed to a plan to cancel $US132 million ($183 million) of their debt in exchange for options and shares in the junior exporter.
In a potential boost to the miner’s chances of survival, its outstanding debt will fall from $US267 million to $US135 million, and the maturity date will be pushed back from December 2017 to April 2021.
However, the refinancing will dramatically change the share register if it goes ahead. Debtors are set to hold 70 per cent of the shares and options on issue if approved.
Breathing space…debtors?… the Australian press has a novel way of expressing things. The creditors are seizing the zombie. Now they will run it at cash costs, which could be as low as $40. As the price sinks they’ll take the rest of the equity as well and only shut it when it runs cash losses for them.
A mining shakeout is one drawn out and painful process that drives prices doooooown.
