Sherritt International Corp T.S

The Press Release

[Contrarian333]

While the completion of Year 1 of the cobalt swap is good news and confirmation of the Cuban's committment to the agreement, the real but subtle gem is further in the news release - the decision to pay the PIK bond interest in cash.  Two interest payments in cash allow for the use of "Restricted Cash"  in returning capital to shareholders.  The amount of capital available for this purpose is defined in the Trust Indenture for the 8.5% bonds due 2026 in Section 4.07 Limitations on Resrticted Payments (don't try to calculate it you will only hurt your head.  Trust me when I say the amount is very substantial.)  So absent a negotiation to expediate things, one would expect to see a significant share buyback begin after the PIK cash interest payment on January 31, 2024.  The return of significant cash to shareholders will remind the bondholders of their structural subordination to shareholders in this very unique situation and soften their relative negotiating position as the Company moves toward a low/no debt status.

[autofocus111]

That's interesting, The extent of terms and conditions tied to the debt are mindboggling. When you say "So absent a negotiation to expediate things" what would such a potential negotiation lead to? A roll-over of the debt into new bonds with less onerous terms, lower interest rate, extended maturity date? As S redeems the bonds over the next few years, at what point does that stop...

[rkhosla]

I think their goal is to be debt free (in terms of bonds or other fixed instruments) but yes obviously maintain a credit facility to use as and when needed.  It is the only way they can redeem some credibility w the market.  

[VerificateASAP]

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[FrozenInOntario]

Thanks Contrarian,   Nice find and you make it worthwhile to read these boards.    While Binedell can not control the nickel/cobalt price, his moves are quite logical to set Sherritt to unlock value.   If he gets a break on the nickel price, Sherrit could have quite a ride.   GLTA,

[rkhosla]

Thanks for this! It reminds me once again of my investment knowledge's 'structural subordination' to yours ; )   So share buy back you say?????  Section 4.07????  Bring it on.....

[CPA023]

If Sherritt wanted to get rid of the Covenant on the Limitation on Restricted Payments of the 10.75% notes before February 2024, it could simply redeem, at a price of 100%, after August 31 2023, all the notes pursuant to Section 3.07(b) of the Trust Indenture of the 10.75% notes. As at March 31, 2023, the outstanding principal amount of the PIK Notes was $70.8 M. With the receipt of the

[VerificateASAP]

This post has been removed in accordance with Community Policy

[FrozenInOntario]

Hey CPA, Do not forget that they will have more than probably to redeem some 2026 this fall. If they have to splurge, they might as well do a buy back on the market and will probably get a discount on the 26 also.  Sounds more like a good deal. Anyway, for the first time in a long time, Sherritt is beginning to have some flexibility thanks to Binedell actions.  While the market did

[CommonCents123]

Hi Contrarian, thanx for your comments.  I'd like to ask for your opinion specific to your comment, "one would expect to see a significant share buyback begin after the PIK cash interest payment on January 31, 2024." In regard to your share buy-back (SBB) comments above, I have a couple of questions if you have time to help me understand. 1) Is this share buy-back (SBB

[YourFriendo]

Says the guy who stated Sherritt would satisfy its Ambatovy debt....and the share price goes wild!