SouthGobi Resources Ltd. said May 21 that it is in default on agreements with China Investment Corp., under which SouthGobi owes the Chinese company US$30.3 million in interest payments and associated fees.
The debts, which relate to a November 2009 convertible debenture deal between the companies, were due May 19 and consist of US$26.3 million in cash interest payments and associated fees and US$4.0 million of payment-in-kind interest shares. SouthGobi had secured deferral agreements but still failed to pay the debt or issue the shares.
Pursuant to the deferral deal signed in June 2017, CIC has the right to enforce payment of the amount owed immediately. This would negatively affect SouthGobi's business and operations, but the miner noted that CIC has not indicated any intention to deliver a notice of default.
SouthGobi said talks with CIC over a repayment plan continue, but there can be no assurance that a deal would be reached on favorable terms.
