Chairman of struggling miner Atlas Iron, Cheryl Edwardes, has begged shareholders to support a restructure plan she says will allow the company to keep its head above water.
Atlas is sitting at a ten-year low this week of roughly 1.9 cents a share, as it continues to face a significant debt pile, worsened by a depressed iron ore price.
A new restructuring plan would give Atlas’ lenders 70% of its equity in exchange for a near-halving of its debt from US$260 million to US$135 million, and an extension of the loan to April 2021.
Edwardes wrote to shareholders – who face a severe dilution of their asset if the deal goes through –asking them not to lodge a protest vote to block the deal.
“I am writing to ask for your crucial support as we seek to finalise the pivotal debt restructuring deal that your directors have proposed for Atlas,” she wrote in an April 16 letter.
“The board is confident that this deal is necessary if we are to secure a strong future for Atlas, giving our company added resilience to withstand iron ore price volatility and maximising its potential to once again generate strong returns for shareholders.”
Edwardes said she appreciated that the proposal may seem complicated, but ensured shareholders that “the key objective is very simple: to deliver the best possible outcome for Atlas and its shareholders given the difficult position in which the company finds itself”.
If the deal does not go through, Edwardes wrote, shareholders will likely receive nothing for their shares.
“Your directors understand the frustration and even disappointment which shareholders have felt since the sharp falls in the iron ore price left the company in a difficult financial position,” she continued.
“We also appreciate that many shareholders will be extremely disappointed at the prospect of their investment being further diluted by the issue of shares and options to the lenders as part of the restructuring deal.”
A meeting is scheduled for April 27 in Perth, where the restructuring deal will be considered.