Sherritt and Partners Sign Definitive Agreement to Restructure Ambatovy Joint Venture
10 November 2017 - 1:00PM
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 the signing of a definitive agreement to restructure its
Ambatovy Joint Venture with Sumitomo Corporation and Korea
Resources Corporation that will result in the transfer by Sherritt
of a 28% interest in the Joint Venture and the elimination of
related debt from Sherritt’s balance sheet consistent with the
previously announced agreement in principle.
“The signing of a definitive agreement to restructure our
Ambatovy joint venture partnership represents a significant
milestone,” said David Pathe, President and CEO of Sherritt. “This
agreement addresses our ’40 for 12’ issue and eliminates the
uncertainty caused by the Ambatovy non-recourse debt, while
ensuring that we retain an ownership stake in the world’s largest
finished nickel laterite mine. Closing of the transaction will
represent the culmination of numerous discussions with our
partners, bondholders, and other lenders over the past three years
to preserve liquidity, de-lever our balance sheet, extend the
maturities of our outstanding public debt, and defer Ambatovy debt
repayment.”
Terms of the definitive agreement are consistent with the
agreement in principle that Sherritt and its joint venture partners
announced in May 2017, and will result in, amongst other things,
amendments to several agreements governing the Ambatovy Joint
Venture and related partner loans, as well as the Operating
Agreement.
Highlights of the Definitive
Agreement:
- Sherritt will transfer 28% and retain a
12% ownership interest in the Ambatovy Joint Venture.
- Sherritt will eliminate $1.3 billion
(at September 30, 2017) in Ambatovy Joint Venture additional
partner loans from its balance sheet.
- Sherritt will resume funding for its
12% interest retroactively to the end of 2015 and expects to pay
approximately US$35 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 maturity in August 2023.
Alternatively, at maturity Sherritt can: (i) elect to repay the
loans in shares or a combination of cash and shares at 105% of the
amount then due, or ( ii) elect to 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 expects to make an additional
payment of approximately US$13 million that will be 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, if
any.
- Sherritt will remain as Operator until
at least 2024.
- Sherritt will regain voting rights and
certain other rights that were suspended when it ceased
funding.
- Sherritt will cover transaction and
other closing costs, including financial and legal advisory fees,
applicable taxes and corporate restructuring costs.
Closing of the transaction remains subject to various conditions
and third party consents. Sherritt expects final closing of the
transaction to occur before year-end 2017.
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”.
Forward-Looking Statements
This press release contains certain forward-looking statements.
Forward-looking statements can generally be identified by the use
of statements that include such words as “believe”, “expect”,
“anticipate”, “intend”, “plan”, “forecast”, “likely”, “may”,
“will”, “could”, “should”, “suspect”, “outlook”, “projected”,
“continue” or other similar words or phrases. Specifically,
forward-looking statements in this document include, but are not
limited to, statements set out in this press release relating to
estimated costs and future funding requirements.
Forward-looking statements are not based on historic facts, but
rather on current expectations, assumptions and projections about
future events, including matters relating to the transaction
disclosed herein; availability of governmental, regulatory and
third party approvals; and the ability to achieve corporate
objectives, goals and plans for 2017. By their nature,
forward-looking statements require the Corporation to make
assumptions and are subject to inherent risks and uncertainties.
There is significant risk that predictions, forecasts, conclusions
or projections will not prove to be accurate, that those
assumptions may not be correct and that actual results may differ
materially from such predictions, forecasts, conclusions or
projections.
The Corporation cautions readers of this press release not to
place undue reliance on any forward-looking statement as a number
of factors could cause actual future results, conditions, actions
or events to differ materially from the targets, expectations,
estimates or intentions expressed in the forward-looking
statements. These risks, uncertainties and other factors include,
but are not limited to the risks and uncertainties set out in the
Management’s Discussion & Analysis of the Corporation for the
period ending March 31, 2017 and the Corporation’s Annual
Information Form dated March 28, 2017, each of which are available
on SEDAR at www.sedar.com. Readers are cautioned that the foregoing
list of factors is not exhaustive and should be considered in
conjunction with the risk factors described in this press release
and in the Corporation’s other documents filed with the Canadian
securities authorities.
The Corporation may, from time to time, make oral
forward-looking statements. The Corporation advises that the above
paragraph and the risk factors described in this press release and
in the Corporation’s other documents filed with the Canadian
securities authorities should be read for a description of certain
factors that could cause the actual results of the Corporation to
differ materially from those in the oral forward-looking
statements. The forward-looking information and statements
contained in this press release are made as of the date hereof and
the Corporation undertakes no obligation to update publicly or
revise any oral or written forward-looking information or
statements, whether as a result of new information, future events
or otherwise, except as required by applicable securities laws. The
forward-looking information and statements contained herein are
expressly qualified in their entirety by this cautionary
statement.
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version on businesswire.com: http://www.businesswire.com/news/home/20171110005279/en/
Sherritt International CorporationJoe Racanelli,
416-935-2451Director of Investor RelationsToll-Free:
1-800-704-6698investor@sherritt.comwww.sherritt.com
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