New York-based investment fund Argentem Creek Partners will soon restart Mexican steel company Altos Hornos de México (AHMSA), and plans to ask its partners to formalize a loan request of up to $600 million from “several institutions” that have shown themselves to be able to finance the paralyzed steelmaker, according to a source knowledgeable about the company's situation.
“The (restructuring) process was at an impasse. The entire Board of Directors resigned, including Alonso Ancira (the main shareholder of AHMSA). The new investors conditioned assuming the Board of Directors until the government accepts their requests and in less than 20 days they will take possession of the Board of Directors,” the source said. “This shows that things with Argentem are going well.”
In March, Argentem signed an agreement with Alonso Ancira to purchase the controlling shareholding of AHMSA. Among the conditions was that the federal government will accept that AHMSA's debt with the public administration be restructured, at an amount totaling more than $500 million.
The good news, the source said, is that two weeks ago, the main directors of the capital management fund Argentem Creek Partners, along with other investors, visited the AHMSA facilities in the northern city of Monclova, Coahuila.
“At the end of the day, the investors who visited AHMSA were very excited. That sped things up,” said the source.
In addition, he said that investors “are going to formalize a syndicated loan of up to $600 million. There are several (financial) institutions that have shown interest in financing AHMSA. The protocolization will be through a shareholders meeting on Thursday, December 21.”
“Everything they asked for has already been fulfilled. If the credit is approved and there are no contingencies, in two months (in February 2024) AHMSA could be starting steel production,” the source told SteelOrbis.
According to consulted experts, the approval of the credit by the shareholders through the assembly will be 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 new shareholders of AHMSA will also discuss the pending payment of $112.5 million to the state oil company Petróleos Mexicanos (Pemex) that Alonso Ancira signed to repair alleged damage to the state company. That payment is the third, which was not paid on November 30.