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Samarco, an iron producer responsible for one of Brazil’s worst environmental disasters, has accused creditors of an “unfortunate attempt” to break a restructuring that, according to the miner, will safeguard thousands of jobs.
Criticism of Samarco, a joint venture between global mining groups Vale and BHP, comes after lawyers for a group of creditors, including London-listed asset manager Ashmore and the US group Canyon Partners, had this week the restructuring proposal as “absurd”.
Under the plan, Samarco has given bondholders and other lenders the option to receive 15% of the face value of the notes in 2041, or exchange the debt for a share in the business. Discrepant creditors are owed $ 22 billion ($ 4.3 million).
The battle between Samarco and his creditors comes more than five years after the non-compliance with the Fundão tailings dam in the Germano mining complex, which killed 19 people and polluted one of Brazil’s largest river basins with a torrent of mining waste.
With about $ 10 billion in loans, Samarco applied for an amount earlier this year judicial reorganization, a court-supervised process in Brazil similar to bankruptcy protection.
The group of creditors, which includes debt specialist Solus Alternative Asset Management, has stated that the plan is intended to protect BHP and Vale from the obligations arising from the November 2015 disaster. Creditors account for most of the debt. of third parties of Samarco.
Creditors’ lawyers, who have mostly bonds and some export loans, dismissed the proposal to “cut 85% of their debts” as “absurd,” according to a document filed this week in a court of law. the state of Minas Gerais. , where is Samarco.
In court documents, they also accused Vale and BHP of abusing their position to extract value to the detriment of creditors, arguing that the two partners in the joint venture should only receive repayments from Samarco after the liquidation of their others. debts.
Just under half of Samarco’s debts are due to Vale and BHP, which will be subject to the same discounts and repayment terms.
Samarco said in response to the court file, “This is an unfortunate attempt by some financial creditors to disrupt the judicial reorganization process and confuse public opinion.” The company insisted it was prepared to negotiate “despite numerous disputes and allegations” from financial creditors.
“The plan presented was prepared in accordance with the company’s current financial capacity” and aimed to preserve more than 6,000 direct and indirect jobs as well as tax contributions, he added.
Samarco said a court-supervised restructuring had to be filed to prevent creditors from affecting its ability to operate and make payments to Renova, a foundation set up to oversee disaster repairs under an agreement with Brazilian prosecutors.
Only Samarco resumed production in December and its production is expected to be less than a third of its total before the dam disaster. However, the group sells iron ore to a booming market.
Steel ingredient prices have hit a record this year, which has helped Samarco’s delinquent bonds regain much of their value. They are trading at nearly 80 cents on the dollar, up from less than 40 cents in early 2020 when the pandemic erupted.
Ivan Apsan, vice president of legal and corporate affairs at BHP Brazil, called Samarco’s terms “fair and reasonable.”
“[They] present the best solution that allows Samarco. . . continue to operate, contributing to the local economy of Minas Gerais and Espírito Santo and funding the Renova Foundation, ”he said.
Vale expressed support for the restructuring plan, which he described as “built to the company’s capacity.”
Ashmore and Canyon Partners declined to comment. Solus did not respond to any requests for comment.
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