Labrador Iron Mines (“LIM”) develops and mines direct shipping iron ore projects in the central part of the Labrador Trough iron ore region. The Labrador Trough is one of the major iron producing regions in the world and has a history of mining dating to the early 1950s. LIM’s shares were traded under the symbol “LIM” on the TSX. LIM raised approximately $300 million to fund its operations. By April 2015, those funds were exhausted resulting in LIM commencing proceedings under the CCAA, with the goal of restructuring its balance sheet and key contracts through a plan of compromise or arrangement. The filing was necessitated largely by the decline in the price of iron ore, which caused many of the key projects to become uneconomic.
LIM engaged our team as its advisor to address financial challenges and to explore strategic options. We reviewed LIM’s business models and performed sensitivity analyses. We also assisted LIM to prepare for a filing under the CCAA and to negotiate with its key financial stakeholder, including in respect of a potential debtor-in-possession loan.
During the CCAA proceedings, we acted as Monitor and worked with LIM’s management to develop a strategy that would position it to refinance and resume operations when iron ore prices recover. We also dealt with First Nation land claim issues, environmental matters, asset disposition strategies, funding and creditor claim determinations. LIM presented a Plan which received near unanimous support of its creditors. The Plan was implemented, resulting in a significant deleveraging of LIM’s balance sheet.