RE:RE:RE:Ambatovy restructuring closesDetails
Sherritt Closes Transaction to Restructure Ambatovy Joint Venture
TORONTO -- (Business Wire) --
Sherritt International Corporation (“Sherritt”) (TSX:S):
NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
Sherritt International Corporation (“Sherritt”) (TSX:S) today announced that it has successfully closed its previously announced transaction to restructure its Ambatovy Joint Venture with Sumitomo Corporation and Korea Resources Corporation. Consistent with terms previously disclosed, Sherritt has transferred a 28% interest in the Joint Venture, eliminated $1.3 billion of related debt from its balance sheet, and will continue to serve as operator of the Ambatovy mine, the world’s largest lateritic nickel and cobalt operation, until at least 2024.
“The close of our Ambatovy restructuring transaction is a fitting end to a year marked by significant progress for Sherritt,” said David Pathe, President and CEO of Sherritt. “After considerable effort and discussions with our partners, we have addressed our ‘40 for 12’ issue, retained an ownership stake in Ambatovy and acquired new options for the repayment of outstanding partner loans.
“More importantly, the elimination of more than $1.3 billion of debt from our balance sheet, coupled with our previous efforts to extend the maturities of our public debt such that we face no debt maturity before the fourth quarter of 2021, significantly strengthens our ability to take advantage of the favorable outlook for battery metals given our ability to produce low cost, high purity nickel and cobalt.”
The transaction to restructure the Ambatovy Joint Venture included amendments to several agreements governing the JV, including related partner loans and the Operating Agreement.
Highlights of the Joint Venture Restructuring Transaction:
- Sherritt transferred a 28%, and retained a 12%, ownership interest in the Ambatovy Joint Venture.
- Sherritt eliminated $1.3 billion (at September 30, 2017) in Ambatovy Joint Venture additional partner loans from its balance sheet.
- Sherritt funded its 12% interest retroactively to the end of 2015, paying approximately US$38 million to fulfill non-funding to date, including accrued interest.
- Sherritt’s outstanding partner loans of US$101 million due 2023 (at September 30, 2017) will continue to be secured by Sherritt’s 12% interest.
- The outstanding partner loans can be repaid in cash at any time through to maturity in August 2023. At maturity, Sherritt can: elect to (i) repay the loans in cash, (ii) repay the loans in shares or a combination of cash and shares at 105% of the amount then due, or (iii) repay in 10 equal semi-annual principal installments (plus interest) commencing in December 2024, at an interest rate of LIBOR +5% applied from the original August 2023 maturity date.
- Sherritt made an additional payment of approximately US$10 million that has been placed into an escrow account to cover potential future funding requirements of the Ambatovy Joint Venture. Any amounts remaining in escrow in August 2023 will be used to repay the outstanding partner loans.
- Sherritt has committed to remain as Operator until at least 2024.
- Sherritt regains voting rights and certain other rights that were suspended when it ceased funding.
- Sherritt was responsible for transaction and other closing costs, including financial and legal advisory fees, applicable taxes and corporate restructuring costs, incurring total fees of approximately US$9 million.
About Sherritt
Sherritt, which is celebrating its 90th anniversary in 2017, is the world leader in the mining and refining of nickel from lateritic ores with projects and operations in Canada, Cuba and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations across the island. Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide. The Corporation’s common shares are listed on the Toronto Stock Exchange under the symbol “S”.