Fri Nov 29, 2013 9:00am EST
* Parent company given go-ahead for reorganisation
* Court asks for more information on subsidiary
* Shares up 71 pct (Adds analyst comment, background)
By Jussi Rosendahl
HELSINKI, Nov 29 (Reuters) - Finnish nickel miner Talvivaara won court approval on Friday to begin a restructuring process aimed at fending off bankruptcy, sending its shares up 71 percent as investors hoped the undertaking would set the company back on its feet.
Talvivaara, hurt by falling nickel prices and chronic production problems, halted operations earlier this month after failing to raise the funds it needed to keep going.
Espoo district court on Friday said Talvivaara's listed parent company could begin restructuring, but asked for more information about subsidiary Talvivaara Sotkamo Ltd - which includes the actual mining assets - before it would decide whether to include its debt in the restructuring process too.
Chief Financial Officer Saila Miettinen-Lahde said the court's decision was nevertheless an important one given that the parent company had bonds worth more than 300 million euros that it is no longer able to repay and will now be able to renegotiate with investors.
However, she added, bankruptcy could still be a possibility if the company's mining operations were not included in the proceedings.
"I can't speculate on what would happen then, but one should note there is considerable debt in the parent company alone," she told Reuters.
Talvivaara Sotkamo was given three weeks to provide an auditor's statement for the Espoo court.
Shares in the company rose 71 percent, or 3 euro cents, to about 7 cents.
NEED FOR FUNDS
Analysts said Friday's announcement did not remove Talvivaara's need for more capital. The company has said it will have cash in the first quarter of 2014, but needs some of that for the court proceedings.
Talvivaara has tried to negotiate new funding with investors and creditors such as the Finnish state, its biggest owner with 17 percent of the shares, and zinc producer Nyrstar, but so far the talks have failed.
"Uncertainty may have decreased only slightly. They still need more capital and there's a lot of work to be done at the site, so basically we don't have any clarity at all about their future as yet," said analyst Markus Liimatainen from FIM brokerage.
Finland's government has said it will only help bail out the company if private investors participate in at least 50 percent of the deal.
Talvivaara's mine is a major employer in the rural Kainuu region of northeast Finland. Once hailed as a pioneer in cost-efficient mining, it ran into a series of production problems last year, including a toxic leak that pushed up uranium levels in nearby lakes and rivers.
The cost of cleaning up and halting production forced the company to go to shareholders with a cash call in March. It has also suffered from a drop of more than fifth in the price of nickel this year. (Reporting By Jussi Rosendahl; Editing by Sophie Walker)
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