OSLO, Feb 8 (Reuters) - The Swedish subsidiary of iron ore miner Northland Resources has filed for court protection against creditors to allow its parent time to negotiate its long term financing.
Oslo-based parent Northland Resources earlier this week failed to raise $375 million through a share and bond issue to cover a funding shortfall at its Swedish Kaunisvaara iron ore mine.
It now wants creditors to give its subsidiary access to $12 million on the unit’s accounts to keep it operating until March 4, by when it hopes to have a long term financing solution in place.
“The decision is based on a shortage of liquidity and deemed to be a necessary step to give the company the time needed to finalise negotiations for a long-term financial solution,” Northland Resources said in a statement.
Shares in the parent firm were nearly 20 percent lower at 1035 GMT on Friday, having lost over 90 percent of their value since Janury 8, when it hit an 11-month high.
The Swedish unit’s biggest creditor is Finnish engineering firm Metso with an unpaid bill of around 310 million Swedish crowns ($48.19 million), court documents showed.
Northland Resources said that it was having “constructive” discussions with its bondholders to secure continued operations at Kaunisvaara.
Northland believes that negotiations with its creditors would only concern the timing and manner of repayment of debt and not involve writing down debt, the firm said in a document to a Swedish court. (Reporting by Victoria Klesty; Editing by Elaine Hardcastle)