NEW YORK First Nickel Inc. has restructured its debt as it tries to improve its liquidity position and help finance development of its Lockerby Mine in Sudbury, Ontario, acknowledging that it "is in serious financial difficulty."
The Toronto-based company has announced a refinancing initiative that will boost the principal amount of its revolving credit facility with the Bank of Nova Scotia to $15 million from $10 million, as well as extend the maturity date to March 30, 2015.
The company also has extended the maturity dates of its loan agreements with Resource Capital Fund IV LP, Resource Capital Fund V LP and a fund managed by West Face Capital Inc.
While the company is required to obtain shareholder approval for such refinancing under Toronto Stock Exchange (TSX) guidelines, First Nickel said it has applied to TSX for an exemption "on the basis that the company is in serious financial difficulty."
"Although the company recognizes that reliance upon the financial hardship exemption is not a preferred route, the board and management of (First Nickel) believe it is a necessary route given the serious immediate financial needs the company faces," the company said.
The companys liquidity position was affected by reduced nickel production in the fourth quarter of 2012, First Nickel president and chief executive officer Thomas Boehlert said in February (amm.com, Feb. 7).
The company also has been seeking longer-term sources of financing to continue the buildout of its Lockerby Mine, which has faced "higher-than-originally-planned capital expenditures for development in 2013."
TSX has told First Nickel that it will start a delisting review, but the miner said it is confident that it will be in compliance with all of the exchanges continued-listing requirements.