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Miner makes cash offer as $3.9bn WICET debt continues to bite

MOUNTING DEBT: WICET coal loader.
MOUNTING DEBT: WICET coal loader. Contributed

MULTINATIONAL mining giant Glencore is rumoured to be offering cash up front to pay off Wiggins Island Coal Export Terminal loans.

The upfront pay out is said to be in exchange for debt relief for Glencore, one of five miner owners of WICET.

The Australian reported Glencore's cash offer this week as the miner ups the ante in ongoing negotiations to find a new funding model to repay $3.9 billion of debt to 19 lenders, instead of the original "take or pay" agreement.

WICET's key representatives were understood to have been meeting yesterday as critical delays take the facility closer to a deadline to refinance its debt in about a year.

When asked for the company's response to the coverage of the cash offer, a spokesman said, "we will not comment on this speculation".

Since opening in 2015, three of the original WICET owners - Bandanna Energy, Caledon Coal and Cockatoo Coal - have collapsed and the coal price has plummeted.

Demonstrating the rising costs for WICET's owners, a Caledon Coal administrator's report said the terminal's handling charge rose from A$14.16/t in 2016 to A$21.83/t in 2017.

Glencore, being the largest of the five remaining owners, has the greatest exposure to the debt repayments.

WICET owes about $3.9 billion in senior debt to a lending syndicate along with $US375m of junior debt.

Meanwhile Glencore continues to vouch for a buyer of its largest Australian coal mine - which ships out of WICET.

The Australian Financial Review reported this week Canadian asset manager Brookfield, one of the world's biggest infrastructure groups, is a keen bidder vying for the company's Rolleston mine.

It has been reported the private equity arm of Canada's largest alternative asset manager is among a dozen parties that have signed non-disclosure agreements and entered the data room.

Rolleston produced about 13.3 million tonnes in 2016.

"This decision is part of Glencore's ongoing program to optimise its portfolio and redeploy capital into other opportunities," the company said when it announced the sale last month.



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