Baffinland seeks approval for a ‘bridge’ loan to buy supplies

Suppliers are “reluctant” to work with Baffinland Iron Mines Corp. until the company gets the funds to continue uninterrupted operations, its lawyer Derek Ricci says.

He and the lawyers for Baffinland’s court-appointed monitor, FTI Consulting, argued the company needs “bridge” financing of up to $153 million to sustain its Nunavut mine’s operations while its creditor protection case is in front of the courts.

The lawyers appeared in a Toronto courtroom virtually Friday, as part of the company’s creditor protection proceeding presided over by Justice Jana Steele.

The Oakville, Ont.-based company asked the judge to approve a loan of up to $660 million from Export Development Canada, a federal Crown corporation whose role is to support Canadian companies and trade.

In a sworn affidavit Wednesday, Baffinland’s chief financial officer Celeste van Tonder said the company, which runs the Mary River iron mine near Pond Inlet, could have a “negative cash balance as of the end of next week” unless it gets the loan.

But, while the fate of the full $660 million loan is in front of the courts, Baffinland’s lawyer asked for a “bridge” loan that would also come from Export Development Canada and would help sustain their operations during the proceedings.

If approved, the $153-million loan would help the company with “purchases of supplies from any manner of things from food to toilet paper to anything you need to run a mine for a year,” Ricci said.

Baffinland announced it was seeking creditor protection on May 15. As of May 14, the company owed $2.6 billion to 231 creditors, including at least $27 million to a dozen northern businesses and entities, according to a list the company compiled for the court.

Baffinland is set to return to court in Toronto on Wednesday.