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Mongolian coal company, Mongolian Mining Corp., has missed a debt repayment to lenders, including BNP Paribas Singapore and the Industrial and Commercial Bank of China (ICBC), after failing to secure a waiver or forbearance agreement from the lenders.

Payment was due 22 March 2016 after the lenders granted an temporary waiver. Further extensions to the payment date were not secured, however, and the company has now defaulted under the agreement.

The situation also constitutes a cross-default on certain other of the company’s debt, including the US$600 million owed on senior notes due 2017.

“The company has proposed to enter forbearance agreements with both the lenders and the steering committee of the holders of the notes,” the company but could make no guarantee that any agreement would be reached.

As on 23 March, the company had not received any notice from any of its lenders demanding immediate repayment.

“The development is not surprising given the distresses state of the company, Trung Nguyen, a Credit Analysts at Lucror Analytics Pte in Singapore, told Bloomberg. “It has been burning cash rather fast when coal prices keep declining.”

In 1H15, the last period results are available for, it announced a pre-tax loss of US$86 million.

Last September, Moody’s downgraded its ratings on MMC’s debt with Dylan Yeo, Moody’s Lead Analyst for MMC noting the company’s “high risk of probability of default […] as its cash holdings and operating cash flow are inadequate to address its near-term payment obligations.”

With such a bleak background Nguyen was pessimistic about the company’s chances of persuading its lenders to grant a reprieve.

“Lenders will find it increasingly difficult to keep extending the term of the existing facilities, while there is little hope of turning the company around under the heavy debt load,” said Nguyen. “Perhaps by not extending the facilities, and forcing a debt restructuring, the company can emerge with a healthier balance sheet and can start to focus on its operation.”

MMC is the largest privately-owned coal mining company in Mongolia, owning two miners in the Gobi Desert: the Ukhaa Khudag mine, which produced 4.6 million t in 2014, and the Baruu Naran mine, which is bought in 2011.