After several months of financial turmoil, iron mining was finally halted on May 24th. Northland announced late on Wednesday evening, however, that a long-term financial solution has been proposed involving an injection of 335 million into the company through a bonds issue.
A consortium of Swedish companies has now stepped in to prop up the company.
“Folksam, Metso, Norrskenet and Peab (are) investing a total of $100 million – $25 million each – in Northland’s bonds,” the consortium said in a statement.
The investment gives the consortium a majority on the company board, as Northland keeps only three of seven places.
“The aim is to have a controlling interest in the company and to contribute expertise in restoring confidence in the company,” the consortium stated on Wednesday evening, adding that Olav Fjell had been recommended as the new chairman.
“Folksam’s financial strength gives us the opportunity to engage in interesting business arrangements on a regular basis,” said Folksam CEO Anders Sundström.
“In the long run, we believe this will be a good deal for our customers.”
Northland had already been in touch with Folksam after announcing its financial difficulties in January. Folksam then proposed looking into debt restructuring, but Northland decided to turn to its stakeholders for a new bond offer. This offer was not, however, fully subscribed.
As Northland’s attempts to shore up financing fizzled out, Folksom and its consortium partners looked at the bond issue solution and decided to make a new offer.
“This solution was supplemented with a requirement for four out of seven seats on the board in order to ensure that Northland adheres to a realistic plan in terms of finances and production,” the statement read.
Norrskenet is a venture capital firm owned in part by the state-owned mining giant LKAB. They said their decision to prop up the Northland mine was a pure financial investment and they would not be involved in day-to-day operations.
“LKAB is fully focused on getting our mines in the Svappavaara field open and to push through our expansion plans. (Northland) is a financial investment,” said LKAB CEO Lars-Eric Aaro.