A significant difference between the restructuring proposals of the mining company Samarco and its creditors should create an impasse in the meetings that start this Wednesday (23) to vote on the proposal and end the company’s judicial recovery.
Creditors of the joint venture between Vale and BHP Group must vote on the restructuring proposal made by the company at a meeting. If the meeting this Wednesday (23) does not have a quorum, a second call meeting will take place on March 10, one day before the current deadline for closing the judicial reorganization.
For now, the proposals by Samarco and the creditors are still very different for the restructuring of around US$ 5 billion (R$ 25.3 billion) in financial debt.
Creditors demanded payment of 100% of the debt, including interest for delay, with exchange for new bonds guaranteed by shareholders Vale and BHP, according to documents from the judicial reorganization.
Samarco proposes a 75% discount on the debt of bondholders, with payment in bonds maturing in 2041. Another alternative would be the conversion of credits into equity, with creditors reaching just over 15% of the company.
Advisers to bondholders say their clients will reject the company’s proposal. On Tuesday (22), the group of creditors Ad Hoc proposed the appointment of former director of Vale and former executive chairman of Nexa, Tito Martins, for the presidency of the board of Samarco.
“The arrival of Tito Martins is a fundamental step in the construction of Nova Samarco — an independent company that will once again grow, create jobs and generate prosperity for the States of Minas Gerais and Espírito Santo and for Brazil, always attentive to its social and environmental responsibility,” the group said in a statement.
Simon Duncombe, vice president for joint ventures not operated in Brazil at BHP, said the creditors’ proposal does not change Samarco’s situation.
“The company’s problem is not management,” the executive said in a videoconference with Reuters, acknowledging that creditors must ask for the appointment of executives.
Earlier this month, Samarco and Vale signed a 20-year production agreement that is expected to add US$ 5.1 billion (R$ 25.8 billion) in revenue by 2042 and advance the production targets for iron ore. iron.
If creditors reject Samarco’s current proposal, the law allows for the proposal of alternative recovery plans. If that happens, Duncombe said Vale and BHP must apply for voting rights at the creditors’ meeting.
Among Samarco’s financial creditors are the managers York, Ashmore, Canyon, Maple Rock and Solus. The bondholder groups are represented by the law firms Padis Mattar Advogados, Ferro, Castro Neves (FCDG) and Davis Polk. Investment bank Houlihan Lokey also advises international creditors.
Samarco is represented in the negotiations by JPMorgan, Vale by Moelis & Co, and BHP Plc by Rothschild & Co.
In parallel, Samarco has been negotiating since last year with federal and state authorities to close a definitive agreement for compensation and reparations for the dam failure in Mariana.
The Public Ministry of Minas Gerais expects to complete the review of programs already underway and start discussions on values in March.
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