Samarco, an iron producer responsible for one of Brazil’s worst environmental disasters, has accused creditors of an “unfortunate attempt” to disrupt a restructuring that the miner says 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 US group Canyon Partners, this week marked the proposed restructuring as “absurd”.
In the plan, Samarco has given bondholders and other financiers the option to pay only 15 percent of the face value of the notes in 2041, or otherwise exchange the debt for a stake in the company. Dissident creditors owe R $ 22 billion ($ 4.3 billion).
The battle between Samarch and his creditors comes more than five years after the violation of the Fundão tailings dam to the German mining complex, which killed 19 people and polluted one of Brazil’s largest river basins with a torrent of mining waste.
Settled with about $ 10 billion in loans, Samarco earlier this year demanded one judicial reorganization, a court-sponsored lawsuit in Brazil similar to bankruptcy protection.
The group of creditors, which includes Solus Alternative Asset Management specialist in distressed debt, have stated that the plan is intended to protect BHP and Vale from obligations arising from the November 2015 disaster. Creditors account for most of the debt. of third parts of Samark.
Lawyers for creditors, who hold largely bonds as well as some export loans, have rejected the proposal to take an 85% cut in their debts as “absurd,” according to a document released this week. to a state court in Minas Gerais. , where Samarco is based.
In court documents, they also accused Vale and BHP of abusing their position to obtain value to the detriment of creditors, arguing that the two joint venture partners should not receive any repayment from Samarco after their other debts. have been welded.
Just under half of Samarco’s debts are due to Vale and BHP, which will be subject to the same discount and repayment terms.
Samarco said in response to the court’s presentation: “It is a more unfortunate attempt by some financial creditors to disrupt the process of judicial reorganization and confuse public opinion.” The company insisted it was ready to negotiate “despite numerous disputes and accusations” from financial creditors.
“The plan presented has been prepared in accordance with the current financial capacity of the company” and is intended to preserve more than 6,000 direct and indirect jobs as well as tax contributions, he added.
Samarco said the filing of a court-supervised restructuring was necessary 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 the Brazilian prosecutors.
Samarco only resumes December production and its production is projected to be less than a third of its total before the dam disaster. However, the group sells its iron ore in a growing market.
Steel ingredient prices have hit a record high this year, helping Samarco meet default obligations to recover much of its value. They traded at nearly 80 cents on the dollar, down from less than 40 cents in early 2020 when the pandemic erupted.
Ivan Apsan, vice president of legal and corporate affairs at BHP Brazil, described Samarco’s terms as “fair and reasonable”.
“[They] present the best solution that allows Samarco to. . . 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 according to the company’s capacity.”
Ashmore and Canyon Partners declined to comment. Solus did not respond to a request for comment.