Nyrstar given $900 million bailout from major shareholder Trafigura, but money won’t go towards paying off debt
Nyrstar has received a $900 million bailout from its biggest shareholder in a vital lifeline for the ailing company that owns the Port Pirie smelter — but it will not be used to pay down debt to SA taxpayers.
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- Nyrstar financial crisis could hit SA taxpayers with $291m bill
- 120 job losses confirmed at Port Pirie smelter
- In May it missed its first loan repayment to the State Government
Nyrstar has received a $900 million bailout from its biggest shareholder in a vital lifeline for the ailing company that owns the Port Pirie smelter.
The Belgian company, which has been struggling with a large debt load and plunging share price, has announced that shareholder Trafigura has signed a binding agreement with it to provide $US650 million ($898 million) to provide working capital.
But the money will not be used to pay down Nyrstar’s large debt pile, meaning the $290 million in debt guaranteed by the State Government remains an issue to be resolved.
“No amount of the New USD650m Facility can be applied to repay, refinance or otherwise redeem any of the Group’s bonds or other financial indebtedness which remain within the scope of the Company’s previously announced and ongoing capital structure review,’’ the company said.
The deal also gives Trafigura security over the Port Pirie smelter, which means that if the broader Nyrstar group was to fail, that company would be the new owner of the smelter.
Trafigura is a Geneva, Switzerland-based commodities trading company, and is one of the world’s largest traders in metals and oil. It currently owns 24.6 per cent of Nyrstar.
“The New USD650m Facility will benefit from a comprehensive guarantee and security package comprising financial guarantees, pledges over shares of certain subsidiaries of the Company, pledges over fixed assets and security over certain inventory and receivables.
“In conjunction with the signing of the binding term sheet for the new $US650m facility, Nyrstar has additionally entered into a $US220 million interim prepayment agreement with Trafigura which will become effective on or about 21 November 2018,’’ the release says.
“This prepayment will be secured by financial guarantees, including from the Company and Nyrstar Hobart Pty Ltd which will grant a pledge over the shares it holds in Nyrstar Port Pirie Pty Ltd in favour of Trafigura.
“This interim prepayment agreement will be replaced and refinanced by the New USD650m Facility when it becomes effective.’’
The company said “The new … facility, including the interim prepayment agreement, significantly strengthens the group’s liquidity position’’.
Nyrstar has been under pressure recently, with analysts indicating that they had a looming problem with debt repayments.
Analyst ABN Amro had urged investors to “abandon ship” and predicted that Nyrstar shares will be virtually worthless as the company grapples with a cashflow problem and $531 million of debt needing to be repaid by next September.
The broker predicted Nyrstar will pursue a debt for equity swap.
Instead the company has done a deal comprised of $US450 million for metals prepayment and $US200 million for suppliers credit.
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