Mongolian Miner MMC Seeks Loan Maturity Extension From Lenders

August 30 09:05 2013 Print This Article

Bloomberg  2013-08-28

By Rachel Evans and Michelle Yun

Mongolian Mining Corp. is talking to
lenders about extending its debt maturities after the company’s
profit swung to loss in the first half of the year.
MMC, which accounts for 42 percent of Mongolia’s coal
exports to China, is negotiating an agreement to reschedule loan
repayments, Chief Executive Officer Battsengel Gotov told
reporters in Hong Kong today. The company reported a net loss of
$25.2 million for the six months through June 30 versus a $31
million profit the same period a year earlier, according to a
statement to the city’s stock exchange.
“We’re talking currently about the potential of
rescheduling the repayment, so pushing out the maturity,” Gotov
said. This will “create a window, and we believe that, for the
next six to 12 months, it will allow the company to focus on
building up cash reserves.”
Policy makers in China, Mongolia’s biggest trading partner,
want to end reliance on so-called smokestack industries by
boosting domestic consumption as growth in the world’s second-
largest economy slows. Prices of coking coal, a raw material
used to produce steel, have fallen this year, with the average
selling price for MMC’s washed hard product sliding 29 percent
in the first half versus the same period of 2012, according to a
company presentation.

Bank Facilities

MMC, which is based in Ulaanbaatar and runs Mongolia’s
Ukhaa Khudag mine, had $934.7 million short- and long-term debt
outstanding and $128.6 million cash as of June 30, according to
filings to the Hong Kong stock exchange.
The debt includes $20 million borrowed from Golomt Bank of
Mongolia via a loan which matures next month, plus $20 million
from Trade & Development Bank of Mongolia LLC which is slated
for repayment by December.
MMC also has $600 million of bonds due March 2017, data
compiled by Bloomberg show. The notes pay an 8.875 percent
coupon and yielded 22.9 percent as of 4:05 p.m. in Hong Kong.
Net financing costs totaled about $38.6 million in the
first six months of the year compared with $5.8 million in the
same period of 2012. The company plans to boost its cash
position by selling a road used for coal transport to the
government and by focusing on reducing costs, Gotov said.
Coal prices, declining since March, have also bottomed, and
started rebounding earlier this month, he said.
Stock in MMC fell 1.2 percent to HK$1.63 in Hong Kong
trading today, the lowest since Aug. 2.

To contact the reporters on this story:
Rachel Evans in Hong Kong at +852-2977-4634 or
revans43@bloomberg.net;
Michelle Yun in Hong Kong at +852-2977-4643 or
myun11@bloomberg.net

To contact the editor responsible for this story:
Katrina Nicholas at +65-6311-2468 or
knicholas2@bloomberg.net

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Saranchimeg Enkhee
Saranchimeg Enkhee

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