Australian-listed coal miner TerraCom is understood to have been in talks with a competitor to provide a financial boost to the company.
Earlier, special situations funds Oaktree Capital Management, Anchorage Capital, Carlyle and Apollo Global Management were believed to be in TerraCom’s data room for a potential refinancing.
However, the understanding in recent weeks is that the board has instead been considering a deal with a strategic partner willing to make an equity injection or embark on a marketing agreement rather than addressing its challenges through a straight finance package.
The company on Tuesday announced that it had refined the structure and terms of a suitable refinance package with two new parties, and that the processed was well advanced.
A combined pre-payment and term loan structure is being considered at terms of between five and seven years and interest rates below 10 per cent, the company said.
TerraCom’s bonds expire on June 30.
TerraCom has operating assets in Australia and South Africa andis looking to refinance $220m of debt ahead of its repayment deadline in June.
In March, the company said that due to the pandemic, TerraCom had experienced delays in completing its refinancing program, but term sheets had been received from a number of parties.
There have been boardroom changes at the company, with chairman Wal King stepping down, replaced by deputy chairman Craig Ransley.
TerraCom said in March that its Blair Athol coal mine continued to deliver strong operational results, with thermal coal export prices recovering.
Overall, the company generated a $52.3m loss for the six months to December.
TerraCom’s current lenders include OCP Asia and Hong Kong-based commodity trader Noble Group Holdings.
It is understood that OCP is prepared to remain a lender, committing $80m towards the debt refinancing, but Noble has challenges elsewhere.
Noble has been buying back debt on some of its investments, according to sources.
TerraCom’s main Australian asset is the Blair Athol Coal Mine in central Queensland, which is considered a strong performer in the sector, given that it has the lowest production costs in the country.
The mine produces 2.7 million tonnes per annum of high-quality thermal coal which is exported to markets including Japan and Korea.
Special situation funds have been closing in on lending opportunities in the coal space as traditional banks shy away from the sector due to environmental concerns surrounding coal.
Advising TerraCom is a former lead portfolio manager for UBS Asset Management, Christian Baylis.
Sub advisers to TerraCom include Skye Capital Advisory and KPMG.
DATAROOM EDITOR
Bridget Carter has worked as a writer and editor for The Australian’s DataRoom column since it was launched in 2013, focusing on capital markets, mergers and acquisitions, private equity and investment banking....
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