Samarco Mineração SA may offer its creditors a stake in the company as a means of paying off US$2 billion of debt, Valor Econômico reported Sept. 29.
The BHP Billiton Group and Vale SA joint venture in Brazil, which failed to make an interest payment on a US$500 million bond due Sept. 26, is struggling to find cash as the iron ore mine faces delays in restarting operations after a tailings dam burst Nov. 5, 2015, claiming the lives of 19 people.
Samarco's management, along with BHP and Vale, are reportedly discussing alternatives with banks and bondholders, which could include a two-year grace period or a debt cut.
The joint venture was reportedly trying to strike a deal in August to push back repayments on US$1.6 billion worth of bank loans until the Samarco mine is operational again.
S&P Global Ratings recently downgraded Samarco's corporate credit ratings to D from CCC on the global scale and from brCCC on the Brazilian national scale after it missed the interest payment.
S&P Global Ratings and SNL Metals and Mining, an offering of S&P Global Market Intelligence, are both owned by S&P Global Inc.