Troubled WA iron ore producer Atlas Iron (AGO) continues to try and find a way to remain alive and not in receivership or administration.
The company yesterday requested an additional three weeks of breathing space to allow it to continue with an operational and financial review in the face of continuing low iron ore prices.
Atlas suspended its shares from trading on April 7 and initiated a review of its business as the iron ore price fell to a staggering decade low of $US46.70 a tonne. Several days later, it announced that the operations would be mothballed, with mining and exports being wound down.
On Tuesday, it asked for the suspension to be extended for an additional three weeks as it works to try and build a viable path forward.
But while Atlas says it wants to find a way of remaining viable, will it have time?
The Australian Financial Review reports that “Fortress Investment Group and Sankaty Advisers are leading the charge by creditors, as the company and its stakeholders work to come to an agreement. Atlas is burdened with $327 million gross debt, most of which is held under a fully drawn Term Loan B facility due in 2017. The group’s $169 million cash on hand at the end of December is understood to have fallen to about $130 million.”
“Recognising the significance of the current iron ore price and its impact on Atlas’ business, the company is in ongoing discussions with its creditors, contractors and a range of other parties as part of its continuing operational and financial review,” the company said in the statement to the ASX on Tuesday.
But Atlas also said operations at its three Pilbara mines would be gradually suspended over the month of April, meaning hopes for a viable future will probably vanish in around 10 days time.
That will be bad news for trucking group McAleese Group (MCS) which generates half its earnings from carrying Atlas Iron ore, and needs income from the miner to service its debt.
McAleese shares were suspended after Atlas announced it would shut its mines. The AFR says McAleese is trying to rally other contractors to convince Atlas to try and find a way to keep going.
But from the market’s point of view Atlas is gone – history, and there are big questions marks over McAleese’s future.
