Northland Resources asks 13%, 12¼% noteholders to release $10 million

By Susanna Moon

Chicago, March 25 - Northland Resources AB said it will hold a meeting on April 12 in Oslo for holders of its $270 million of 13% senior secured bonds due 2017, its NOK 460 million of 13% senior secured bonds due 2017 and its $20 million of 12¼% senior secured bonds due 2016.

The company is asking to shorten notice for summoning bondholder meetings to three days from 10 days until June 1 and that its trustee release and make available $10 million from debt service accounts, according to a notice from bond trustee Norsk Tillitsmann ASA.

The company also will agree to pay interest on April 11.

Northland is in talks with investors to secure long-term financing but needs about $20 million to fund liquidity needs in the meantime, the notice said.

The company expects to find long-term financing by mid-April.

Recent vote

Northland holders voted to adopt the company's proposed resolution in connection with its previous announcement that it was in voluntary debt composition in Sweden, according to a trustee notice on March 15.

At the time, the trustee said that Northland filed for reconstruction with the Lulea District Court in Sweden on Feb. 8 based on a shortage of liquidity to give the company enough time to finalize negotiations for a long-term financial solution.

Norsk Tillitsmann previously said the company entered voluntary debt composition because of its funding situation. Northland had invested more than $900 million in the Kaunisvaara project as of the end of December, and the Northland group identified a $450 million funding shortfall in January, a previous news release said.

On Feb. 7, Northland asked the trustee to release $6 million from debt service accounts, with the remaining $6 million of the credit support intended to be provided by other stakeholders. Norsk Tillitsmann said talks are ongoing with the other stakeholders.

Norsk Tillitsmann already received approvals from bondholders to release the $6 million of credit support ahead of the March 15 bondholders' meeting to formally vote on the request.

The advance was structured as a voluntary prepayment by Northland in conjunction with and conditional upon a re-advance of those funds to the company on behalf of the bondholders in order to gain the benefit of priority ranking.

Northland is a Luxembourg-based producer of iron ore concentrate.

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