Creditors Reject Brazil Pellet-Maker Samarco's Debt-Restructuring Plan

Creditors of Brazilian iron ore pellet-producer Samarco Mineração rejected the company’s proposal to restructure its debt under a bankruptcy protection plan, mining giant Vale said in a statement, bnamericas.com reported. A 50/50 joint venture between Vale and BHP, Samarco filed for bankruptcy protection earlier this year to avoid early payment to some bondholders in an effort to preserve its cash flow and resume full production. The company currently has debts of 50bn reais (US$8.8bn), of which 26bn reais are in outstanding bonds and 24bn reais are owed to Vale and BHP. The proposal rejected by bondholders involved a 75% haircut, according to a document unveiled by the firm. A new round of negotiations between the company and creditors is likely to take place in the coming months, although Samarco did not provide a specific date. Samarco is eyeing production at full capacity by 2030. The company halted operations from late 2015 until December 2020 due to a tailings dam collapse in Minas Gerais state. Production this year is expected to reach 7.7Mt, representing 26% of capacity. In November 2015, its Fundão tailings dam at the Germano complex in Mariana collapsed, destroying two villages, killing 19 people and causing widespread environmental damage. In a presentation to bondholders, Samarco said total capex projected for 2022 to 2042 is 17.5bn reais in real terms. Read more.

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