Bondholders say that “in practice” the discount on the debt is 96.8%.
03/09/2022
On the eve of the general meeting of creditors, scheduled for Thursday, Samarco’s bondholders reacted against the new version of the judicial recovery plan, indicating that the result may be a bit further from what the mining company expected. In a document to the judicial recovery’s judge, funds such as Moneda, Golden Tree, Silver Point and Solus claim that the proposal brings “even more beneficial” conditions to parent companies BHP and Vale than the previous plan, which they had already questioned.
Eight months and 14 days have passed between the first and second draft of the plan, a period that the creditors argue was not used for effective negotiation. Instead, it was used only by Samarco in the drafting of the proposal. The company, in turn, has already indicated at previous times that there was resistance from creditors in negotiating the terms, in an attempt to impose a strategy on the company.
The company’s latest proposal says that unsecured credits will be paid in a single installment in 2041, taking into account a discount of 75% on face value and interest of 1% per year — inflation-adjusted only on credits in the Brazilian currency. In the creditors’ account (considering the almost 20-year grace period, the haircut, inflation and interests), what the company is proposing is that they accept the payment of the credits with a total discount, implicit and explicit, of 96.8%.
“The alternative to debt forgiveness is to force the creditors to become Samarco’s shareholders, without any political rights,” wrote the lawyers from the four law firms representing the bondholders. They also insist on maintaining the shareholders’ claims on the judicial recovery.
The group that objects the plan proposed by the company represents 82.5% of the judicial recovery claims, when excluding Samarco’s debt to BHP and Vale.
People close to the company argue that the extension of the debate on the judicial recovery case makes it difficult for Samarco to resume its focus on its operations and, consequently, its future ability to pay. The company’s legal administrators had scheduled the meeting to deliberate on the plan for February 23rd and, due to lack of quorum, rescheduled it for March 10.
Source: Valor International