Sherritt International Corp. is joining a flurry of miners that are buying themselves time in a tough commodities market by restructuring their debt.
The Toronto-based company said on Tuesday that it plans to push back the maturity date on $720-million in unsecured debentures by three years. The extension would provide breathing room for the money-losing nickel producer as it waits for prices to recover. “Upon completion of the extension, there will be no maturities until November, 2021,” David Pathe, Sherritt chief executive, said in a statement.
The move underscores miners’ need to carefully manage cash as the vicious downturn in base metal prices that began in 2011 slogs onward. In recent days, both First Quantum Minerals Ltd. and Teck Resources Ltd. have announced their own moves designed to ensure liquidity and push out debt maturities.
In Sherritt’s case, the focus is on three series of notes that are due in 2018, 2020 and 2022. Under the company’s proposal, the maturity date for each series would be extended by three years.
The miner said it has already signed up 44 per cent of debt holders for the proposed extension and is confident it will win enough support to meet the two-thirds level required for approval of the deal.
Debt holders who agree to the extension have a choice of either taking a cash payment equal to 2 per cent of the principal amount of their notes, or accepting warrants that will allow them to buy a set amount of Sherritt stock at the recent price of 74 cents a share.
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