Cover Mongolia: [BREAKING: MMC hires advisers to restructure $600m bonds maturing 2017]

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January 27, 2016

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Mongolian Mining Hires Advisers to Restructure 2017 Dollar Notes

January 26 (Bloomberg) -- Mongolian Mining Corp., a coking coal producer, hired advisers for a potential restructuring of $600 million of notes due in 2017 as the company struggles with declining coal prices amid oversupply and weakening demand from China’s steel industry.

The company hired JPMorgan Chase & Co. and SC Lowy Financial HK Ltd., and encouraged noteholders to form a committee to help discussions, it said in a filing to the Hong Kong Stock Exchange. The bonds dropped to 17.5 cents on the dollar Tuesday, their lowest on record.

Steel output and demand in China, the biggest producer, is contracting as the world’s second-largest economy grows at the slowest pace in a generation. The country plans to cut crude steel production capacity by 100 million tons to 150 million tons, the State Council said Sunday, without specifying a time frame. Coking coal futures have slumped 23 percent in Dalian in the past year, while the company has posted six straight semi-annual losses.

“Changes to economic policy implemented within the group’s principal target market, China, resulted in reduced crude steel production and consequently lower coking coal consumption and declining import volumes,” the company said in its statement.

Mongolian Mining is due to pay a $26.6 million coupon on March 29. If it fails to do so, it will be the fourth Asian coal company to default on its offshore debt obligations in the past year, according to data compiled by Bloomberg.

Winsway Enterprises Holdings Ltd., Hidili Industry International Development Ltd. and PT Berau Coal Energy have all missed payments on their dollar notes in the past 12 months.

(BN)

MMC: APPOINTMENT OF RESTRUCTURING ADVISERS AND REQUEST FOR SECURITY HOLDERS’ ATTENTION

January 26 -- This announcement is made by Mongolian Mining Corporation (the “Company”, together with its subsidiaries, the “Group”) pursuant to Rule 13.09(2)(a) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) and the Inside Information Provisions (as defined in the Listing Rules) under Part XIVA of the Securities and Futures Ordinance (Chapter 571, Laws of Hong Kong).

The board of directors of the Company announces that the Company is seeking a potential restructuring of the US$600,000,000 8.875% senior notes due 2017 issued by the Company (the “Notes”). The Company encourages the holders of the Notes (the “Holders”) to form a committee of the Holders for the purposes of facilitating discussion between the Holders and the Company about such potential restructuring of the Notes.

APPOINTMENT OF RESTRUCTURING ADVISERS

The Company has appointed J.P. Morgan Securities (Asia Pacific) Limited (“J.P. Morgan”) and SC Lowy Financial (HK) Ltd. (“SC Lowy”) as restructuring advisers (the “Restructuring Advisers”) to the Company for the purposes of providing advice with respect to the potential restructuring of the Notes.

During the last few years, the coking coal markets experienced continuing price decline amid the oversupply situation experienced by the global industry. Furthermore, changes to economic policy implemented within the Group’s principal target market, China, resulted in reduced crude steel production and consequently lower coking coal consumption and declining import volumes. In order to overcome challenges faced due to deteriorated market conditions, the Company remains focused on the strategic initiatives to improve its competitive position, including but not limited to pursuing the opportunity to engage in coal mining, processing, transportation and exploration activities at Tavan Tolgoi coal deposit in Mongolia (the “TT Transaction”). However, even though the Company has been continuing its negotiations with the relevant parties, no definitive agreement or transaction structure has been achieved to date and the Company does not currently expect any conclusion of such negotiations in the near future. The Company is committed to full and open communications and will update its shareholders and investors if and when there are significant developments with respect to these negotiations or the TT Transaction in general. However, there is no assurance that the negotiations will progress, or if they do, that they will result in a transaction.

The Restructuring Advisers will assist the Company in assessing various restructuring options and formulating a plan to implement an appropriate restructuring of the Notes. This plan will be developed with a view to ensuring the continued stability of the Group, and protecting the interests of all stakeholders of the Company.

ENGAGEMENT WITH HOLDERS

In light of the adverse macro-economic environment, and to better protect the interests of all the stakeholders of the Company, the Company desires to start a dialogue with the Holders about a possible restructuring arrangement in relation to the Notes and expects to engage with Holders on a restructuring proposal as soon as possible. The Company is committed to full and open communication with the Holders and will seek the highest level of responses from the Holders to facilitate open communications and obtain their input during the process.

The Company encourages the Holders to come forward to form a committee of Holders for the purposes of facilitating discussions between the Holders and the Company about such possible restructuring of the Notes. The Company looks forward to a constructive dialogue and timely creditor support to ensure the long-term success of the Company’s business for the benefit of all stakeholders. The Holders who would like to enquire about forming a committee should contact our restructuring advisers:

Restructuring Advisers

J.P. Morgan Securities (Asia Pacific) Limited

Chater House

8 Connaught Road Central Hong Kong

Attention: Liability Management Group

Tel: +852-2800-7616 / +852-2800-7639

Email: JPM_MMC@jpmorgan.com

SC Lowy Financial (HK) Ltd.

Suite 1401-02, Central Tower

28 Queen’s Road, Central, Hong Kong

Attention: Liability Management Group

Tel: +852-3405-1310 / +852-3405-1326

Email: lmgroup@sclowy.com

THERE CAN BE NO ASSURANCE THAT ANY DISCUSSIONS WITH ANY HOLDER WILL LEAD TO A PROPOSAL ACCEPTABLE TO THE HOLDERS MORE GENERALLY OR THAT DISCUSSIONS WITH THE HOLDERS CAN BE PROGRESSED TO ANY POSITIVE CONCLUSION. ACCORDINGLY, THE COMPANY OFFERS NO ASSURANCE THAT THE PROPOSED RESTRUCTURING OF THE NOTES WILL BE SUCCESSFULLY CONCLUDED. SHAREHOLDERS OF THE COMPANY, THE HOLDERS, HOLDERS OF OTHER SECURITIES OF THE COMPANY AND POTENTIAL INVESTORS IN THE SECURITIES OF THE COMPANY ARE ADVISED TO EXERCISE EXTREME CAUTION WHEN DEALING IN THE SECURITIES OF THE COMPANY.

Link to release

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