London — Commodities trader Trafigura said Monday it has made funding arrangements that should allow it secure a restructuring deal with Belgium-based zinc and lead producer Nyrstar's bondholders and lenders, and result in the trader becoming the majority owner of the operating business of Nyrstar.
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As part of the agreements, Trafigura will provide $250 million of secured bridge financing to Nyrstar during an interim period to ensure that its operations continue on an uninterrupted basis, in addition to the continued availability of a $650 million trade finance facility agreement made effective in December. The trader is also offering financial guarantees to Nyrstar bondholders and convertible noteholders, it said in a statement.
Cash-strapped Nyrstar, Europe's largest zinc producer and the second biggest globally, also has operations in the US, Canada and Australia. In the first nine months of 2018, its zinc metal production was up 4% from January-September 2017 at 797,000 mt, with lead output up a marginal 1% at 124,000 mt. Production of zinc in concentrate from Nyrstar's mining operations rose 22% to 107,000 mt.
Underlying EBITDA for January-September 2018 was Eur134 million, down 17% from Eur162 million in the year-earlier period. On September 20, Nyrstar cautioned that its H2 2018 earnings were set to fall short of H1 levels, primarily on the back of a sharp drop in zinc prices.
The company is set to announce its full-year 2018 results on April 30.
"Nyrstar has been faced with substantial financial and operational difficulties over the last few years, but it also has very solid industrial and mining operations on which we can build a stable future," Jeremy Weir, executive chairman and CEO of Trafigura, was cited as saying.
According to Weir, the new arrangement "protects employment and provides a stable environment and long term platform for Nyrstar's market leading operations worldwide." Nyrstar Group has around 4,100 employees.
The latest financial provisions are a continuation of the support that Trafigura has provided to the Nyrstar Group since 2016, the trader said.
Late last month, Trafigura executives said at the company's offices in Geneva that the current "very low" zinc inventory levels meant that "any pick up in growth would have an impact (on this market). If we see a resolution of the trade war we could be in a very healthy position for growth this year," they told reporters.
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