Brazilian pellets producer Samarco, a 50/50 joint venture between Vale and BHP Billiton, has filed for bankruptcy protection in Brazil, the equivalent to Chapter 11 in the US, so the company can restructure its debt.
Samarco said most of its debt belongs to foreign bondholders, who did not reportedly agree on the company’s terms to restructure the multi-billion-dollar debt. Earlier this year, Bloomberg estimated Samarco’s debt to reach about $3.8 billion, and the company said most of its debt was contracted before the deadly Mariana dam burst in November 2015.
The company argued it tried to make regular payments to creditors until August 2016, and since then it has tried to renegotiate its debt with the foreign creditors. The company argued they’ve asked for unfeasible market terms.
Samarco is currently operating at 26 percent its iron ore capacity. The company said that filing for bankruptcy protection in Brazil will allow it to continue iron ore output.