Mirabela debt holders may overlook missed payment

The holders of the nickel miner's debt may take no action against the company after it missed an interest payment, while bankers consider a debt-for-equity swap asset sale.

Investors in Mirabela Nickel Ltd’s $US395 million of notes are likely to grant the miner a standstill, taking no action against the company after it missed an October 15 coupon payment.

The noteholders, advised by Cleary Gottlieb Steen & Hamilton LLP and Gilbert Tobin, are currently in discussions with Mirabela and hope that Rothschild, an investment bank with mining expertise, can propose a solution by Christmas.

Rothschild’s bankers in Brazil, the US and Australia are assessing whether they can keep Mirabela’s nickel mine open after a major customer of the company said it will close its smelter next month. The bankers are also considering a potential debt-for-equity swap, and a sale of Mirabela’s assets. 

Perth-based Mirabela missed a mid October coupon payment on the notes, which carry a 8.75 per cent coupon and are due 2018. The missed payment has seen the indicative value of the notes fall to between $US0.25 and $US0.30 compared to par. If Mirabela fails to make a payment of interest on the notes within 30 days following October 15, the company will be potentially in default.

The office of Ian Purdy, Mirabela’s chief executive, says he will not comment on negotiations with the company’s noteholders.