Glencore's back with another restructure proposal for debt-laden Queensland coal port, the Wiggins Island Coal Export Terminal.
Street Talk can reveal the persistent miner and WICET shipper presented its new proposal to fellow shipper shareholders and the terminal's management this week, in a bid to address WICET's unenviable financial structure.
It is understood Glencore's newest proposal asks lenders to take a haircut of up to 30¢ in the dollar on their $US2.8 billion exposure, in return for the Swiss miner's continued support as the biggest port user.
WICET board members and the shippers voted on the proposal at a board meeting on Tuesday, sources said, and it is expected to be presented to the lending group as early as Thursday.
It will be interesting to see whether the lending group - which was put together by ANZ Banking Group earlier this decade and now also includes a handful of distressed debt investors - jump at the offer.
The lenders have been watching Glencore closely ahead of the debt's first refinance date in 2018.
As the port's biggest customer, Glencore's continued support is paramount to the restructure. However, Glencore is not sitting idle and is moving to offload its Rolleston open cut coal mine in the Bowen Basin.
But lender sources have expressed cynicism to Street Talk regarding Glencore's intentions; the thinking is that it is highly unlikely anyone will buy Rolleston because it will mean being exposed to the $US2.8 billion owing to the lenders. The sceptics see the sale process as an excuse for Glencore to strip out other mines owned by Rolleston so that the value of those mines is not available to help meet Rolleston's obligations to WICET.
The lenders see such a move as potentially reducing security against their WICET loans, which would be a troubling thought given the quantum of debt involved and the potential writedown.
And while the banks could always bail ahead of the slated refinancing, Glencore offloading the other mines owned by Rolleston will likely see the secondary market quote plummet.
Glencore, advised by Arnold Bloch Leibler, is well aware of the lending group's nerves, and no doubt reckons there is a small window to push through its latest proposal.
WICET's assets were valued at $3.6 billion at the end of 2015-16, according to its annual financial report. WICET has not yet filed its 2016-17 annual report with the Australian Securities and Investments Commission.
The terminal has capacity to ship 27 million tonnes of coal, with 20 million tonnes allocated to its coal miner owners under long term agreements.
