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BHP GROUP

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REFILE-UPDATE 1-Brazil miner Samarco offers creditors shares or 85% haircut - sources

06/10/2021 | 09:52pm EDT

RIO DE JANEIRO, June 10 (Reuters) - Samarco Mineracao SA, a bankrupt joint venture between Brazilian miner Vale SA and BHP Group Ltd, proposed on Thursday a plan to restructure 50 billion reais ($10 billion) in debt with an offer of preferred shares or a cash payout in 2041 equal to 15% of the current value of holdings, sources said.

Samarco filed for bankruptcy protection in April to prevent creditors' claims from affecting operations that restarted at the end of 2020, more than five years after a tailings dam collapsed causing one of Brazil's worst environmental accidents.

The 'haircut' plan proposes discounts of 85% on the amount to be paid to the company's largest creditors who do not accept preferred shares in the mining company, people with direct knowledge of the plan told Reuters. They spoke on the condition of anonymity because they were not authorized to discuss the matter with media.

To the main group of creditors, which includes bondholders, shareholders and suppliers, the company proposed converting the amounts owed into preferred shares entitled to special dividends, according to the sources.

If creditors do not accept preferred shares, they may choose to receive payment in cash in 2041 at the 85% discount, but adjusted for inflation, the sources said. Currently, the mining company is privately held, with only common shares.

The company confirmed to Reuters its approval of the restructuring plan, but not the details.

Samarco's debt with Vale and BHP totals 23 billion reais, while bondholders are owed the equivalent of 26 billion reais. Debt to large and medium-sized suppliers is about 310 million reais.

The collapse of a dam at the Samarco mine complex in 2015 killed 19 people and severely polluted the Doce River with mining waste. The company has been the focus of significant litigation from bondholders holding nearly $5 billion in debt.

The company proposed the full payment of debts to employees, totaling about 10 million reais, within 30 days after the plan's approval, the sources said.

To another group that includes small and medium-sized suppliers, the company also proposed the full payment of approximately 11 million reais in debts, within 30 days after approval, for amounts up to 50,000 reais, and within 180 days for larger debts, the sources said.

Samarco restarted operations in December with the resumption of one of its three concentrators for processing iron ore at the Germano complex, located in Mariana, and one of four pellet plants at the Ubu complex in Anchieta, with a production capacity of between 7-8 million iron ore pellets. (Reporting by Marta Nogueira; Writing by Anthony Boadle; Editing by Kenneth Maxwell)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
BHP GROUP 1.03% 47.16 End-of-day quote.11.15%
EURO / BRAZILIAN REAL (EUR/BRL) 0.05% 5.9228 Delayed Quote.-5.87%
VALE S.A. 1.17% 111.4 End-of-day quote.27.39%
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Financials (USD)
Sales 2021 57 313 M - -
Net income 2021 14 924 M - -
Net Debt 2021 7 479 M - -
P/E ratio 2021 15,3x
Yield 2021 5,58%
Capitalization 220 B 167 B -
EV / Sales 2021 3,97x
EV / Sales 2022 3,98x
Nbr of Employees 31 589
Free-Float 58,2%
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Mean consensus OUTPERFORM
Number of Analysts 16
Last Close Price 47,16 $
Average target price 39,18 $
Spread / Average Target -16,9%
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Managers and Directors
NameTitle
Mike Henry CEO, CFO & Non-Independent Executive Director
John Kenneth Norman MacKenzie Chairman
Rag Udd CTO & VP-Technology Global Transformation
Malcolm William Broomhead Independent Non-Executive Director
Anita Margaret Frew Independent Non-Executive Director
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