A consortium including Glencore PLC proposed a rescue deal for troubled Canadian miner Sherritt International Corp. , offering a potential alternative to an earlier plan from an ally of United States President Donald Trump.
The latest proposal to be disclosed would provide Sherritt with fresh capital and leave the consortium owning at least 55 per cent of the company on a fully diluted basis, according to a Monday statement.
Eligible existing shareholders would have the right to buy newly issued stock at US$0.12 a share. A proposed private placement with Gillon Capital announced in May would give the Texas-based family office of former Trump adviser Ray Washburne a controlling 55 per cent stake, though Sherritt hasn’t disclosed the price at which Gillon would acquire its shares.
The Glencore consortium’s proposal is the same plan whose terms were disclosed last week by an ad hoc group of Sherritt bondholders. The creditors said in July that they were evaluating the alternative recapitalization proposal, which had been submitted by unidentified strategic and financial investors.
The consortium, which includes an unnamed U.S. anchor investor, Trifon Natsis, Kyma Capital Ltd. and Glencore, said Monday that it submitted the plan to Sherritt’s board on June 26.
Sherritt’s talks with Gillon have drawn scrutiny from holders of the company’s bonds and its investors. Kyma, Sherritt’s largest shareholder, said last month that it would call a special shareholder meeting to seek the removal of chairman Peter Hancock and another director, arguing the company needs new leadership.
Toronto-based Sherritt is one of Cuba’s largest foreign investors . The company has been in turmoil since the Trump administration tightened sanctions on Cuba, compounding an energy crisis that has left the island nation struggling to import enough fuel to meet its needs.
Sherritt halted production at its nickel and cobalt mine in eastern Cuba in February because of the energy crisis. After initially seeking to dissolve its joint venture with a Cuban state-owned company and exit the island, Sherritt announced that it had struck a preliminary agreement to sell a controlling stake to Gillon.
The consortium said its non-binding proposal is fully funded through equity commitments and would support Sherritt’s nickel and cobalt operations, including its Fort Saskatchewan refinery.
Last month, Sherritt warned that its ability to continue as a going concern was in doubt, saying it wouldn’t have enough cash to meet its obligations if lenders declared a default and demanded early repayment.