Samarco seeking waiver on bank loans

Monday, 15 August 2016 22:09:20 (GMT+3)   |   Sao Paulo
       

Brazilian pellet producer Samarco, a 50/50 JV between BHP Billiton and Vale, is seeking a standstill agreement with banks, so it can pay its debts only when output resumes.

The company, which is expected to restart its operations in mid- to late-2017, according to a Vale forecast, is said to be looking for a waiver on BRL 5.08 billion ($1.6 billion) in bank loans. A media report noted co-owners Vale and BHP Billiton are refusing to put more money into the company to help it cover its financial obligations.

Despite the claim, Vale said last week in a presentation to analysts that it made a BRL 3.7 billion provision to aid Samarco.

Vale expects to contribute some BRL 470 million in H2 2016 to help Samarco fund its expenses, following an agreement with Brazil’s government to cleanup the affected areas near the dam. The amount is part of Vale’s expected BRL 3.7 billion total provision to aid its JV owned pellets producer.

A media report explained Samarco is asking creditors to waive debts repayment until it resumes its activities. Lenders are said to be pressuring Samarco to “at least” receive interest payments on the company’s debts, a media report citing a person with direct knowledge of the talks said.

Credit rating agency Fitch anticipated in July that Samarco could run out of cash any point between Q3 and Q4 this year.
 
1 USD = BRL 3.18 (August 15)

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