{"id":1168105,"date":"2020-02-26T17:26:54","date_gmt":"2020-02-26T23:26:54","guid":{"rendered":"https:\/\/www.mining.com\/?p=1015297"},"modified":"2020-02-26T17:26:54","modified_gmt":"2020-02-26T23:26:54","slug":"sherritt-shares-jump-on-50-bond-haircut","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1168105","title":{"rendered":"Sherritt shares jump on 50% bond haircut"},"content":{"rendered":"<p>Sherritt International (TSX:S)\u00a0<a rel=\"noreferrer noopener\" aria-label=\"announced Wednesday (opens in a new tab)\" href=\"https:\/\/www.sherritt.com\/English\/Investor-Relations\/News-Releases\/News-Release-Details\/2020\/Sherritt-Announces-Transaction-to-Improve-its-Capital-Structure\/default.aspx\" >announced Wednesday<\/a> a proposed transaction designed to improve capital structure and reduce the beleaguered\u00a0Canadian nickel miner\u2019s debt by half.<\/p>\n<div class='d-flex justify-content-center d-xs-block d-sm-block d-md-none'>\n<div id='div-gpt-ad-1561499308230-0'><script>googletag.cmd.push(function() {googletag.display('div-gpt-ad-1561499308230-0');});<\/script><\/div>\n<\/div>\n<p>The transaction would give investors a 50% haircut&nbsp;and&nbsp;would reduce Sherritt\u2019s total outstanding principal debt obligations by about C$414 million (about $322m) and reduce annual cash interest payments by C$19 million (about $13m).&nbsp;<\/p>\n<p>Sherritt, which has significant assets in Cuba, is offering to buy back as much as C$443 million of its debt at a big discount to face value. Bondholders will get 53 cents on the dollar plus accrued and unpaid interest if they accept by 5 p.m. New York time on March 27, or 50 cents plus interest if they wait, <a rel=\"noreferrer noopener\" aria-label=\"Bloomberg reported (opens in a new tab)\" href=\"https:\/\/www.mining.com\/web\/sherritt-offers-50-haircut-for-bonds-in-out-of-court-recovery\/\" >Bloomberg reported<\/a>. &nbsp;The bondholders would get new second-lien notes with an 8.5% coupon.&nbsp;<\/p>\n<p>Total debt is currently at about C$588 million in debentures, plus another C$145m on a leftover&nbsp;Ambatovy&nbsp;partner loan \u2013 resulting in over C$700 million,&nbsp;Sherritt\u2019s&nbsp;CEO David Pathe told MINING.COM.&nbsp;&nbsp;<\/p>\n<figure class=\"wp-block-pullquote alignright\">\n<blockquote>\n<p> \u201cAnother element [of] this transaction is that our partners will see us exit  [Ambatovy] &nbsp;altogether, and&nbsp;eliminate the remainder of our&nbsp;Ambatovy- related debt\u201d<\/p>\n<p><cite>David Pathe, Sherritt CEO<\/cite><\/p><\/blockquote>\n<\/figure>\n<p>Sherritt\u2019s debt almost quadrupled between 2007 and 2008 as the company developed the massive&nbsp;Ambatovy&nbsp;nickel and cobalt project in Madagascar with Sumitomo Corp. and Korea Resources Corp. From the start, the project was plagued with delays and cost overruns, and a political coup that resulted in the suspension of mining licenses.&nbsp;<\/p>\n<p>Pathe says while&nbsp;Sherritt&nbsp;still retains a 12% equity interest in&nbsp;Ambatovy, the company has been trying to&nbsp;exract&nbsp;itself for years and plans a full exit.&nbsp;<\/p>\n<p>\u201cIt\u2019s something we\u2019ve been working on, looking at different alternatives for months now, we landed on this transaction because we think this is the fairest to all the affected stakeholders across our series of debentures, and treating them all equally,\u201d Pathe said.&nbsp;<\/p>\n<p>\u201cAnother element [of] this transaction is that our partners will see us exit that project&nbsp;altogether, and&nbsp;eliminate the remainder of our&nbsp;Ambatovy- related debt,\u201d Pathe said.&nbsp;<\/p>\n<p>\u201cIt will help preserve our liquidity, which has been our focus,\u201d Pathe said. He added that over past two years Sherritt has eliminated over C$2 billion in debt, and with the completion of Wednesday\u2019s transaction will be closing in\u00a0$3 billion in debts off the balance sheet.\u00a0<\/p>\n<p>\u201cIt will extend our maturities out, right now we face maturities on our existing debt in 2021, 23 and 25 \u2013 this will push all of those out to 2027,\u201d Pathe said.&nbsp;&nbsp;<\/p>\n<p>Pathe said Wednesday\u2019s proposal will provide security to bought&nbsp;holders, and&nbsp;treats them equally.&nbsp;&nbsp;<\/p>\n<p>For more than a decade, Sherritt has fought to reduce its debt, selling&nbsp;all of&nbsp;its coal assets&nbsp;in 2013 as commodity prices languished. A spike in cobalt prices in 2017 helped the company post its first annual profit since 2012 but it fell back into the red the following year, Bloomberg reported.&nbsp;&nbsp;<\/p>\n<p>Meanwhile, a&nbsp;<a rel=\"noreferrer noopener\" href=\"https:\/\/www.bloomberg.com\/news\/articles\/2019-02-27\/trump-nears-key-cuba-sanctions-decision-over-support-for-maduro\" >tightening of US sanctions<\/a>&nbsp;against Cuba has resulted in the island nation being unable to pay Sherritt for the energy it produces in foreign currency. Sherritt said its Cuban partners have committed to increasing its $2.5 million monthly payments to the miner.&nbsp;<\/p>\n<figure class=\"wp-block-pullquote alignright\">\n<blockquote>\n<p> Adding to&nbsp;Sheritt\u2019s&nbsp;challenges in Cuba and Madagascar, the nickel market has been volatile <\/p>\n<\/blockquote>\n<\/figure>\n<p>&nbsp;\u201cDebenture holders also get the benefit of a cash sweep, beginning in 2021, that will further demonstrate our commitment to ongoing debt reduction, and we think, to where the bonds are trading now, this gives them a piece of paper that is of real value to them and puts us in a position where we\u2019ll be able to repay that debt in full,\u201d Pathe said.&nbsp;<\/p>\n<p>Adding to&nbsp;Sherritt\u2019s&nbsp;challenges in Cuba and Madagascar, the nickel market has been volatile. Nickel price was up last&nbsp;summer, but&nbsp;fell back after the Indonesian ore ban lifted and fears on tariffs on global trade, and now coronavirus.&nbsp;&nbsp;<\/p>\n<p>Pathe said he expects more volatility in the coming months, but remains confident in the nickel market, as he said current global supply is not\u00a0sufficient\u00a0to meet demand. <\/p>\n<p>By market close in Toronto Wednesday, Sherritt\u2019s stock was up by over 16% on the TSX. The day\u2019s trading volume reached over 1.2 million, more than double the daily average. The company has a C$71.5 million market capitalization.\u00a0\u00a0<\/p>\n<p><em>(With files from Bloomberg) <\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Sherritt, which has significant assets in Cuba, is offering to buy back as much as $443 million of its debt at a big discount to face value.<\/p>\n","protected":false},"author":47,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[949,369],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1168105"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/47"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1168105"}],"version-history":[{"count":2,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1168105\/revisions"}],"predecessor-version":[{"id":1168116,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1168105\/revisions\/1168116"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1168105"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1168105"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1168105"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}