Brazilian mining joint venture (JV) Samarco Mineracao is reportedly planning a capital raise of $2bn in an effort to exit bankruptcy protection.
The new capital will be raised from investors via a competitive process, reported Reuters citing court documents.
Go deeper with GlobalData
In the court filings, the company stated that the capital increase is crucial for sustaining its operations in the coming years.
Comprising Vale and BHP Group, Samarco intends to use the proceeds to fund its operations for the 2022-2027 period.
However, the plan will take place nearly a month after its restructuring plan is approved by a Brazilian judge. The restructuring plan is due to be discussed with the company’s creditors.
Moreover, the bankrupt JV will have to make payments to Renova, a foundation established by BHP and Vale in 2016.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataRenova was set up to repair and compensate for the tragic Fundão dam burst, which occurred in 2015.
Samarco had filed for bankruptcy protection in April 2021 in the state of Minas Gerais, Brazil, to avert creditors’ claims from impacting its operations.
Earlier this year, the mining firm faced a lawsuit from noteholders seeking $898m (A$1.16bn) claims. The noteholders claim that the firm failed to consider their requests to restructure their debt.
However, BHP and Vale could fund Samarco’s new capital increase to cover at least a portion of it, a source familiar with the matter told the news agency.
Recent reports emerged that Vale and BHP Group are planning to provide a debtor-in-possession loan of $238m (R$1.2bn) to Samarco Mineracao.
Samarco Mineracao resumed operations last year after more than five years following a tailings dam collapse.
In 2015, the dam collapse at the Samarco mine led to the death of 19 people while severely polluting the Doce River with waste from the mine.
