A proposal to change WICET's debt repayment contracts has been rejected.
A proposal to change WICET's debt repayment contracts has been rejected. Mara Pattison-Sowden

WICET sent back to drawing board for $3.5bn debt repayment

BANKS owed more than $3.5 billion by Wiggins Island Coal Export Terminal have rejected its latest proposal to change its debt repayment agreement.

It is understood the Gladstone facility's 19 lenders knocked back a proposal for a five-year extension to the September deadline to repay or restructure WICET's $3.75 billion debt, sending the company back to the drawing board.

The Australian Financial Review reported lenders were worried there was no certainty the deal would help solve the underlying problem of the terminal's high cost of use and its associated low volumes.

Glencore ships more coal out of WICET than any of the four other coal miners that own the asset: Yancoal, Wesfarmers, New Hope and Aquila.

In its financial statement last year the company said there was "significant doubt" surrounding its ability to remain viable if it did not find a solution to its debt issue before September.

Since opening the Port of Gladstone facility in 2015, three owners - Bandanna Energy, Caledon Coal and Cockatoo Coal - have collapsed, some partly blaming WICET's expensive take-or-pay arrangement agreed to when coal prices were significantly higher.

Pressure has mounted on the remaining owners to sort the mounting debt, with several proposals to change the terms of repayment having been rejected.

Those proposals included Glencore's offer for cash up front in exchange for debt relief, and a proposal to repay senior lenders in full but not junior lenders.