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.