SYDNEY: Australia's Atlas Iron Ltd on Tuesday said it was holding "positive" discussions with unsecured creditors and was not at risk of defaulting after deciding to cease mining due to low iron ore prices.
"There is no default pursuant to the terms of our secured debt facilities," it said in a statement to the Australian Securities Exchange, where Atlas share have been in a voluntary trading halt since April 7.
Atlas, which was scheduled to ship the majority of its projected 13 million tonnes of iron ore this year to China, will cease all exports shortly after mining is brought to a halt later this month.
The company borrowed $275 million through a term loan in the US markets which matures in December 2017.
The loan, which has no earnings-based covenants, paid a high margin of 750 basis points over the Libor benchmark.
Spot iron ore prices have fallen 60 percent over the past year following a massive rise in production, which analysts blame on overestimates of China's appetite for imported ore by majors Vale, Rio Tinto and BHP Billiton.
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