Talvivaara's top creditor withdraws support for reorganisation


* Nyrstar has withdrawn support for Talvivaara overhaul

* Analyst sees the miner's debt restructuring uncertain

* Creditors include Nordea, Finnvera and Varma

* Talvivaara shares fall 5 pct

By Jussi Rosendahl

HELSINKI, Nov 26 (Reuters) - Indebted Finnish minerTalvivaara said on Tuesday its biggest creditor, zincproducer Nyrstar, has withdrawn support for its courtapplication for a corporate restructuring, prompting the courtto ask for more information.

Talvivaara, hit by falling nickel prices and chronicproduction problems, earlier this month halted operations andpetitioned the Espoo District Court near Helsinki for acourt-supervised reorganisation and warned it might facebankruptcy if the process failed.

But the court on Tuesday said it wanted the company toprovide more information and Talvivaara later confirmed thatNyrstar, the world's largest zinc producer which had contractedto take Talvivaara's future output of zinc concentrate, hadwithdrawn its support.

Nyrstar had paid Talvivaara 232 million euros ($313 million)in advance for zinc deliveries, making it the miner's biggestcreditor, court documents showed.

Last week Talvivaara said un-named stakeholders had baulkedat providing additional funds to help restructure debts of morethan 300 million euros ($400 million).

Analyst Antti Viljakainen from Inderes Equity Research saidit looked like Talvivaara now needed to find new supporters toenter the overhaul process.

"It was surprising that Nyrstar withdrew. Until now theyhave been one of Talvivaara's most patient supporters," he said.

"Apparently Nyrstar's restructuring support was prominent,and I assume Talvivaara now has to ask other creditors forrecommendations."

No-one at Nyrstar was immediately available for comment.

The miner's other creditors include Nordea Pankki Suomi with receivables of around 130 million euros.Government agency Finnvera is owed 58 million euros and pensionfund Varma 34 million euros, while Canada-based uranium minerCameco Corp has advanced the company 54 million euros.

Atradius Credit Insurance N.V., Danske Bank,Pohjola and Handelsbanken are also in thelist with smaller receivables, along with more than 200 othercreditors, according to the court documents.

The Finnish banks and Finnvera support the restructuring,and Talvivaara has to submit more information to the court byNov 29.

Shares in the company were down 5 percent at 0.035 euros.Viljakainen said Talvivaara's restructuring plan looked veryuncertain.

"Even if they were admitted to the debt restructuring, andthat would succeed, it would still help them only up to a point.They must fix their operational problems to boost production."

Talvivaara, once hailed as a pioneer in cost-efficientmining, has recently faced repeated setbacks from environmentaltroubles to operational hitches, while suffering from a drop ofmore than a fifth in the price of nickel since the start of theyear.

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