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Embattled McAleese in administration

AAP logoAAP 28/08/2016 Prashant Mehra

Embattled mining services group McAleese has gone into voluntary administration after failing to secure a lifeline from Hong Kong-based debt trader SC Lowy.

Trading in the company's shares was suspended on Monday, with the collapse coming just hours ahead of a shareholder meeting to consider a change in its board of directors.

McAleese has appointed McGrathNicol as administrator after forbearance arrangements with SC Lowy ended due to its failure to lower operating costs through a renegotiation of rental leases with property group TTPH.

McAleese's uncompromised senior debt and all accrued interest became immediately due and payable as a result.

"The administrators intend to continue to operate all four business units in the short term while they undertake an urgent financial and operational assessment on a business-by-business basis," McGrathNicol said in a statement to the ASX on Monday.

It is in advanced negotiations with financiers for a short-term funding facility to provide working capital. A first statutory meeting of creditors will be held on September 8 to consider the appointment of administrators.

McAleese, which hauls iron ore by truck from Pilbara mines to Port Hedland, has been in strife since April when key customer Atlas Iron decided to shut down operations at its iron ore mines there because of a plunge in iron ore prices.

The group agreed to a funding deal with SC Lowy, which was to be ratified by shareholders on September 19. The deal was, however, dependent on the fulfilment of two conditions, one of which was the reduction in McAleese's annual property rental costs from TTPH.

McGrathNicol said McAleese shareholders are highly unlikely to receive any value for their existing shares.

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