Atlas deal slashes debt

Ailing iron ore miner Atlas Iron has done a deal with the majority of its lenders, who have agreed to a plan to cancel $US132 million ($183 million) of debt in exchange for equity in the junior exporter.

Atlas said more than 75 per cent of lenders had agreed to the move.

The company's debt will drop from $US267 million to $US135 million, and the due date will be pushed out three and half years to April 2021.

The deal will allow Atlas to avoid a breach of its debt covenant on December 31, which requires total asset value to be at least twice secured debt.

As a result of the deal lenders are set to hold 70 per cent of the shares and options on issue if approved.

Shareholders will likely get a chance to vote on the refinancing plan, assuming Atlas can get all the lenders to agree to the plan.