LUXEMBURG, LUXEMBURG -- (Marketwire) -- 03/01/13 -- Northland Resources S.A. (TSX: NAU)(OSLO: NAUR)(FRANKFURT: NPK)(OMX: NAURo) ("Northland" or "the Company") hereby announces that the preliminary reorganization plan for the Company's Swedish subsidiaries was presented at today's meeting of creditors. The creditors expressed their support of the continued reorganization.
As previously announced, the Lulea District Court today held a meeting of creditors in the companies in reorganization, Northland Resources AB (publ), Northland Sweden AB and Northland Logistics AB.
The administrator, Lars Soderqvist, accounted for the measures undertaken to date, such as the ongoing contacts and negotiations that have taken place with the companies' suppliers with the objective of the companies' operations being able to continue during the reorganization period. Questions from suppliers and creditors have been answered on an ongoing basis. In addition, written information on the superior right of priority has been prepared. Furthermore, procedures have been established for the management of payments during the reorganization of the companies.
The earlier assessment that the companies are sufficient, i.e. that the value of their assets exceeds that of their liabilities, remains unchanged. It should, however, be noted that the valuation of the assets, and thus the assessment of sufficiency, is based on a going concern assumption, that is, the assumption that the operations will continue over a foreseeable future. If, instead the assessment was to be made based on sale values (liquidation values) of the individual assets, the outcome would be uncertain.
Within the framework of the reorganization, short-term financing takes high priority and several alternative solutions to the matter are being examined in parallel. Among these, the following can be mentioned:
-- Discussions with key suppliers on the supply of goods and services on credit with a credit term of 45 days against collateral in the form of superior rights of priority.-- Contacts with external financiers regarding the provision of short-term loans against collateral in the form of superior rights of priority.-- Negotiations with the company's principal creditors regarding injections of liquidity.
To date, the companies have entered into an agreement regarding a loan of USD 6 million from the bondholders. Agreements also have been entered into with a number of suppliers regarding delivery on credit during the reorganization.
Negotiations are currently under way regarding long-term financing. It is expected that these negotiations will be completed during April. The conditions for being able to reach an agreement that resolves the long-term financing needs are judged to be favorable, which, in itself, favors the companies' continuing their operations during this period.
At the same time the companies need to take precaution for the event that available funds are not sufficient to support the business at present level until the negotiations are concluded. The Board of Directors or each company, as a first step, shall immediately reduce its operations to a level adapted to the cash flow situation of the companies, including the demanded short-term financing. The assessment of the boards is that this reduction will not negatively impact the long-term value of the business of the companies.
The Board of Directors further resolved that the companies shall reduce its business operations to a level which in principle entails a total halt to capital investments and focus on continued production only, in the event the demanded short-term financing is not granted. The assessment of the boards is that this reduction will negatively impact the long-term value of the business of the companies.
Combined, the companies have 350 different creditors, of which the seven largest, excluding the bond holders, account for a combined 85 percent of the total claims volume. The companies have assets whose value exceeds the sum of the companies' liabilities. The starting point is thus that all creditors will receive payment in full.
The companies' creditors expressed their support for the continued reorganization. The court appointed a creditors committee consisting of representatives of the bondholders, major and minor creditors as well as employees. The role of the committee is to monitor the interest of all creditors. The administrator will also consult with the committee in material issues within the framework of the reorganization.
The preliminary reorganization plan is available via the Company website, www.northland.eu, investor relations, financials.
Karl-Axel Waplan, President & CEO, Northland Resources S.A.
Northland is a producer of iron ore concentrate, with a portfolio of production, development and exploration mines and projects in northern Sweden and Finland. The first construction phase of the Kaunisvaara project is complete and production ramp-up started in November 2012. The Company expects to produce high-grade, high-quality magnetite iron concentrate in Kaunisvaara, Sweden, where the Company expects to exploit two magnetite iron ore deposits, Tapuli and Sahavaara. Northland has entered into off-take contracts with three partners for the entire production from the Kaunisvaara project over the next seven to ten years. The Company is also preparing a Definitive Feasibility Study ("DFS") for its Hannukainen Iron Oxide Copper Gold ("IOCG") project in Kolari, northern Finland and for the Pellivuoma deposit, which is located 15 km from the Kaunisvaara processing plant.
Northland Resources S.A.
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Northland Resources S.A.
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Northland Resources S.A.
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