Troubled copper miner Nord Resources Corp. has reached a forbearance and loan modification agreement with its lender after defaulting on loans.
The loan modification also provides up to $350,000 in other funds advanced from the lender, Nedbank Ltd., to Nord, to cover expenses for the company's mine, which secures the loan. Nord owns the Johnson Camp Mine in Tucson, Arizona.
Nedbank has agreed not to foreclose on Nord's mine for at least 45 days from Sept. 1, unless Nord defaults on the forbearance agreement, or unless the company ends up in bankruptcy. The $350,000 has an interest rate of Libor plus 8.5 percent. Nord has been in default on the loan since 2010, according to filings with the U.S. Securities and Exchange Commission.
Nord announced the forbearance agreement in a Sept. 9 SEC filing. The company has had trouble keeping up with regulatory filings because it doesn't have the money to pay for an auditor, it says. The company hasn't yet filed an annual report for 2013 or a quarterly report for the period ended March 31.
In the company's latest annual report, which was filed March 27, 2013, accountant Mayer Hoffman McCann PC raised substantial doubt about Nord's ability to continue as a going concern, or without the threat of liquidation, because of the company's historical operating losses, lack of liquidity and inability to make principal and interest payments on its loans. Nord says that it faces competition in the mining industry, where many of its competitors are larger and better capitalized.
Nord had experienced a decrease in sales between 2012 and 2013. In the nine months ended Sept. 30, 2012, the company had sales of about $6.4 million, and for that same time period in 2013, it had sales of less than $4.1 million.
In that March 27 annual report, the company said it has been looking financing to fully resume operations, but that it hasn't been able to raise the capital. In 2010, Nord had to suspend a portion of operations to reduce expenses.
For the previous edition of Turnaround Tuesday, see Zaza Energy Regains Nasdaq Listing Compliance.
For more struggling companies, see Mergers & Acquisitions Distressed Company Watch List.