Anger as WICET owners reveal new deal on $3.9b debt
MINERS who ship out of Gladstone's Wiggins Island Coal Export Terminal have put forward a proposal to the asset's 19 senior lenders owed $3.9 billion as to how they could manage its hefty debt burden.
The miners that effectively own the Port of Gladstone facility are contractually bound to pay a fixed rate to export coal from the terminal regardless of the size of their shipping loads, with those payments used to pay loans on the resources boom-inspired WICET.
But the debt obligation has rapidly become too great for the miners on the back of the collapse in the coal price in the past two years and it is understood the group has appealed to the banks to scrap the terms of the deal.
The miners are urging the banks to change the terms of the contract so shippers are not responsible for others in the syndicate which collapse, so lenders carry the liabilities.
WICET's miners include Glencore, Wesfarmers, New Hope, Yancoal, Caledon and Aquila, as well as Bandanna Energy and Cockatoo Coal, which collapsed amid the commodities slump.
The terms mean the other miners are now thought to be liable for Cockatoo Coal and Bandanna Energy's liabilities, unless the banks foot the bill, which could have them lose millions.
Lenders are in talks about the latest plan, but any agreement on such a proposal is far from being finalised.
It may prove to be a heavy blow for ANZ and NAB if the largest group, Glencore, gets off the hook for the payments, with both banks said to be owed between $200million and $300m.
Should lenders holding 75% of the debt agree to the plan, the remaining holders of the loans who are unhappy about the proposal will probably offload their exposures on the secondary market.
The improving coal price could make the proposal more palatable to the lenders.
Fort Street Advisers is working for WICET, and McGrathNicol advisory firm has been engaged by the lenders.
A sticking point for the lenders is said to be that WICET's management is siding more so with the miners than with those carrying the debt.
An alternative to the deal, however, is that WICET could be placed into voluntary administration, forcing lenders to take a cut regardless.