Brazil’s Samarco to run out of cash by Q3-Q4; restart not expected until H2 2017

Monday, 18 July 2016 00:01:46 (GMT+3)   |   Sao Paulo
       

Brazil’s pellet producer Samarco, a 50/50 JV between BHP Billiton and Vale, could run out of cash at any point between Q3 and Q4 this year, credit rating agency Fitch said on Monday, while downgrading both the company’s national and global long-term issuer default ratings (IDRs) to C, from CCC.

According to Fitch, the downgrade reflects the agency’s expectations that Samarco won’t restart its operations until H2 2017, as opposed to a H1 2017 estimate released previously by the credit rating agency.

Fitch added the downgrade is also due to the political sentiment that weighs on Samarco as well as to its incapacity to obtain the needed licenses in order to operate.

Fitch said Samarco could be forced to reach a standstill agreement to restructure its debts “in the coming months,” so it could keep some money at its accounts, which could then be used to pay for those operating licenses.

“Government authorities are unlikely to let [Samarco] use blocked money by authorities, which would partially mitigate the pressure over the company’s cash flow,” it noted.

Fitch’s downgrade follows another downgrade by S&P in the company’s credit ratings, as the company’s outlook and financial metrics deteriorate.





Similar articles

Net profit declines sharply at Aço Verde Brasil

28 Mar | Steel News

Ex-Brazil BPI exporters achieve slight rise in latest deals to US amid better scrap sentiment

28 Mar | Scrap & Raw Materials

Brazilian high-grade iron ore price declines sharply in two days

27 Mar | Scrap & Raw Materials

Vale selected to begin award negotiations for US briquette plant

26 Mar | Steel News

Prices stable for Brazilian slab export deals

26 Mar | Flats and Slab

Brazilian high-grade iron ore price stable from last week

25 Mar | Scrap & Raw Materials

CRC import price offers stable in Brazil

25 Mar | Flats and Slab

Price gap between low and high-phosphorus Brazilian BPI narrows in last deals

25 Mar | Scrap & Raw Materials

Brazilian crude steel production increases in February

22 Mar | Steel News

Vale and Samarco subject to lawsuit in the Netherlands

20 Mar | Steel News