September 26, 2016 / 10:17 PM / 2 years ago

UPDATE 1-Brazil's Samarco misses bond payment, has 30-day remedy period

(New throughout, adds details of bond contract and creditors interviews)

By Ana Mano

SAO PAULO, Sept 26 (Reuters) - Samarco Mineração SA, the Brazilian iron ore mining joint venture that suspended operations in November following a dam disaster, missed an interest payment on a $500 million bond that was due on Monday, trustee Bank of New York Mellon Corp said.

As a result, Samarco will have 30 days to make the payment, or else investors holding at least 25 percent of the $500 million bond could declare the principal due immediately, according to contractual terms of the 5.375 percent security due in Sept. 2024.

Samarco, as well as joint owners Vale SA and BHP Billiton Ltd, declined requests for comment. At least two bondholders said the payment due Monday was worth around $13.5 million.

“We did not receive any money or information today from Samarco,” a New York-based spokesman for BoNY Mellon told Reuters in an emailed statement.

The price on the bond fell to 33.625 cents on the dollar to yield 24.886 percent on Monday, from 34.25 cents on Friday. The bond has dropped from about 87 cents in November, when a tailings dam burst and unleashed a mud flow that killed 19 people, left hundreds homeless and polluted a major river.

The missed payment underscores the reluctance of Samarco’s parents to provide the venture with additional funding after agreeing to pay up to 20 billion reais ($6.2 billion) in compensation and fines related to the spill.

Bondholders and analysts said Monday’s decision could trigger a fresh round of bondholder talks, as uncertainty mounts about when operations will resume.

Samarco has $2.2 billion in outstanding bond obligations and about $1.6 billion of bank loans. Samarco faces about $54 million in interest payments on three bonds through November.


After a series of setbacks with regulatory agencies in Brazil, Samarco failed to set a definitive timeframe for resuming operations, which would be crucial to continue debt payments.

Samarco asked bondholders to identify themselves before Aug. 31 to sound their willingness to engage in a potential debt restructuring. On the eve of the interest payment, no offer had materialized, according to one Samarco bondholder who asked for anonymity.

Samarco and banks including Japan’s Bank of Tokyo-Mitsubishi UFJ Ltd, HSBC Holdings Plc, Bank of America Corp and a Japanese export credit agency, had engaged on discussions to renegotiate loan debt. Talks failed as Samarco and the banks did not agree on a plan, a person familiar with the situation said last month.

The banks did not return emails seeking comment. (Reporting by Ana Mano; Additional reporting by Guillermo Parra-Bernal in São Paulo; Editing by Daniel Flynn, Chris Reese and David Gregorio)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below