Mirabela Nickel Limited - Debt Rating Lowered by S&P

PERTH, AUSTRALIA, Oct. 23, 2013 /CNW/ - Mirabela Nickel Ltd. (Mirabela or the Company) (ASX: MBN) wishes to advise that Standard and Poor's Ratings Services (S&P) lowered the Company's corporate credit rating from 'CCC+' to SD (Selective Default). The Company provides the attached Press Release from S&P.

Mirabela Nickel Ltd. Downgraded To 'SD' After Missed Interest Payment; Issue Rating Lowered To 'D'

MELBOURNE (Standard & Poor's) Oct. 23, 2013—Standard & Poor's Ratings Services said today that it has lowered its corporate credit rating on Australian nickel mining company Mirabela Nickel Ltd. to 'SD' from 'CCC+'. We also lowered the issue credit rating on the US$395 million 8.75% notes to 'D' from 'CCC+'. At the same time, the ratings were removed from CreditWatch with negative implications, where they were placed on Oct. 2, 2013.

The rating actions stem from Mirabela's announcement that it did not make the interest payment of about US$17.3 million on its 8.75% senior notes, which was scheduled to be paid on Oct. 15, 2013. This nonpayment would only constitute a default under the terms of the notes if it is not remedied within the 30-day grace period that will end by November 15.

"At this stage, we are uncertain about Mirabela's willingness to make the payment within the grace period, although we believe that it currently has sufficient cash to meet that obligation," said Standard & Poor's credit analyst Thomas Jacquot. "The company had about US$80 million of cash at the end of August 2013."

On September 27, Mirabela announced that one of its two offtakers, Votorantim Metais Niquel S.A. (Votorantim) had served notice to the company of its intention to terminate its offtake agreement at the end of November. The agreement was scheduled to expire at the end of 2014. As Mirabela has a US$50 million loan from Banco Bradesco S.A. (Bradesco) that is secured on the Votorantim receivables, termination of the offtake agreement could lead to a default under the Bradesco loan which, if not remedied, could lead to a cross default under the US$395 million notes.

Subsequently on October 18, Mirabela announced that the termination notice served by Votorantim was invalid and that Votorantim would honor its obligations as originally envisaged, although Mirabela expects Votorantim to purchase only a small proportion of the mine's output. This announcement would indicate that the likelihood of an immediate default under the Bradesco loan and potential subsequent cross default under the notes had reduced. However, the company subsequently announced, on October 22, that it has not paid the interest due on the notes.

Mr. Jacquot added: "We consider a missed interest payment as a default when the nonpayment has occurred and is continuing for at least five business days from the scheduled payment date. This is even though a payment default has not occurred according to the legal provisions of Mirabela's notes, which incorporate a 30-day grace period."

The company has indicated its intention to provide a further update to the markets by the end of October. Should the interest payment remain unpaid by Nov. 15, 2013, we would expect to lower the corporate credit rating on Mirabela to 'D'. Any potential upward movement on the rating above 'SD' is uncertain at this stage, both in terms of likelihood and magnitude.

RELATED CRITERIA AND RESEARCH

• Criteria For Assigning 'CCC+', 'CCC', 'CCC-', And 'CC' Ratings, Oct. 1, 2012
• General Criteria: Timeliness of Payments: Grace Periods, Guarantees, And Use Of 'D' And 'SD' Ratings, Dec. 23, 2010
• 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
• 2008 Corporate Criteria: Rating Each Issue, April 15, 2008

Contacts

Media Contact:
Richard Noonan; richard.noonan@standardandpoors.com; 613 9631 2152

Credit analysts:
Thomas Jacquot, thomas.jacquot@standardandpoors.com
May Zhong, may.zhong@standardandpoors.com

Standard & Poor's Ratings Services, part of McGraw-Hill Financial (NYSE:MHFI), is the world's leading provider of independent credit risk research and benchmarks. We publish more than a million credit ratings on debt issued by sovereign, municipal, corporate and financial sector entities. With over 1,400 credit analysts in 23 countries, and more than 150 years' experience of assessing credit risk, we offer a unique combination of global coverage and local insight. Our research and opinions about relative credit risk provide market participants with information and independent benchmarks that help to support the growth of transparent, liquid debt markets worldwide.

Standard & Poor's (Australia) Pty. Ltd. holds Australian financial services licence number 337565 under the Corporations Act 2001. Standard & Poor's credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act).

SOURCE Mirabela Nickel Ltd.