Mexican steel giant Altos Hornos de México (AHMSA), paralyzed by insolvency, reported that last week it signed binding agreements with a foreign investor to obtain a loan to reactivate steel production operations in the coming months, the company reported in a statement.
“AHMSA entered into binding agreements with a potential foreign investor dated March 7, 2024, subject to conditions whose objective is to provide financing (...) to support its restructuring efforts within the framework of its bankruptcy proceedings,” the company reported in a statement sent to the Mexican stock market.
Since the beginning of last year, steel production was paralyzed due to the insolvency of AHMSA. In June 2023, a federal judge granted judicial protection to the company for a restructuring of its millionaire liabilities with its creditors through the Commercial Bankruptcy Law.
"AHMSA will begin to call its suppliers and other creditors in the coming days, to request their support in entering into a restructuring agreement, with the hope of restarting its operations in the coming months," said the steel company with production capacity of 5.5 million metric tons of steel through blast furnaces (BF) and an electric arc furnace (EAF).
In the information sent to the stock market, AHMSA reiterated last year's agreements regarding the resignation of the company's board of directors headed by Alonso Ancira Elizondo, AHMSA's largest shareholder.
Without violating the regulations of the Mexican judicial system, to prohibit the change of administration, AHMSA said that the new direction of the company will be until the judge allows it and the approval of the shareholders through an assembly.
The financing agreement was approved by shareholders at a meeting last December, it is for $350 million, a figure that could increase to $600 million. These agreements come after the agreement to sell the company, signed by Alonso Ancira in February 2023 with a group of investors led by the New York investment fund manager Argentem Creek Partners.
The capital receipt announced yesterday (March 11) will be through a senior secured super-priority multi-tranche debtor in possession term loan facility (DIP Financing). Financing used by companies in judicial restructuring processes, such as the case of AHMSA through bankruptcy proceedings. DIP Financing has priority over other types of debts and existing claims.
The financing is subject to AHMSA obtaining satisfactory results in the recent challenges filed against some million-dollar tax credits imposed by the government's tax collection arm of the federal government, the Tax Administration Service (SAT).