Dannemora bondholders agree to temporarily waive liquidity covenant

By Angela McDaniels

Tacoma, Wash., Aug. 5 - Dannemora Mineral AB received a waiver from the holders of its 11¾% callable senior secured bonds due 2016, according to a notice from bond trustee Norsk Tillitsmann ASA.

The bondholders agreed to temporarily waive the minimum liquidity covenant, which requires the company to maintain at least SEK 50 million of liquidity. The waiver will be effective until Sept. 22.

Holders voted on the waiver at a meeting at 7 a.m. ET on Aug. 5 in Oslo. All of the votes cast were in favor of granting the waiver.

The company is an iron ore producer based in Danderyd, Sweden. It said that a temporary decline in iron production in May means its second-quarter EBITDA will be negative. Without the waiver, it expected to breach the minimum liquidity covenant by Aug. 5.

A group of investors holding 71% of the bonds formed an ad hoc committee and agreed to vote in favor of the waiver.

In exchange for the waiver, the company agreed to, among other actions, comply with a fee agreement with the committee's legal adviser, Bingham McCutchen (London) LLP, and to appoint an expert to perform technical and geological due diligence.

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