Mexican steel giant Altos Hornos de México (AHMSA), paralyzed since last year due to insolvency, reported that its mining arm Minera del Norte (Minosa) presented to the judge an agreement to its creditors to exit its own commercial bankruptcy and requested that they approve a removes 94 percent of the debt. Failure to do so would make restarting steel production unfeasible, the company said.
“Minosa requests the support of all its creditors for the approval of the bankruptcy agreement (...) A reduction will be applied to the unpaid balance of the corresponding common credit, for an amount equivalent to 94 percent,” AHMSA informed the Mexican stock market.
Of the rest, 1.0 percent will be paid at the time of signing the agreement and the remaining 5.0 percent over a period of 17 years with an interest rate of 9.1 percent.
According to AHMSA, the bankruptcy agreement of its mining subsidiary, in bankruptcy since March 9, 2023, is essential to allow the reactivation of the company in steel production in AHMSA (in bankruptcy since June 2023).
“Due to the extreme fragility in which the company finds itself, this restructuring scheme is the only one that gives the company financial viability to resume its operations and not have to advance to a liquidation, which would be even worse scenario than the one that is proposed and with this the operational reactivation (of AHMSA) would no longer be possible and therefore, it would not generate jobs and business opportunities for suppliers,” reported the Mexican steelmaker.
Among Minosa's main creditors is Afirme Grupo Financiero, the banking arm of Grupo Villarreal, the former owner of Siderúrgica Lázaro Cárdenas-Las Truchas (Sicartsa), the asset that ArcelorMittal bought 18 years ago, in 2006 for $1.4 billion.
Grupo Villarreal is also one of the largest steel processors in Mexico and is the uneasy partner of its business rival Grupo Collado. He is also one of those interested in buying AHMSA.
With a production capacity of 5.5 million metric tons of steel, AHMSA has total assets of $2.38 billion and total liabilities of $3.30 billion, which means a negative stockholders' equity (technical bankruptcy) of $924 million, according to the most recent public information from the company dating back to 2022.