BHP-Vale Brazil Mine Said to Weigh Missing Next Bond Coupon – by Cristiane Lucchesi (Bloomberg News – September 14, 2016)

Samarco Mineracao SA is considering skipping bond coupon payments that are due as soon as this month as the stalled Brazilian iron-ore miner runs out of money, according to people with knowledge of the matter.

Without knowing when it can restart mining, the venture owned by BHP Billiton Ltd. and Vale SA is yet to engage in formal restructuring talks with bondholders, two of the people said, asking not to be named because the matter is private. As a result, there’s not enough time to reach a restructuring deal before the coupons are due, they said.

Once the world’s second-largest producer of iron-ore pellets, Samarco also is seeking an agreement on about $1.6 billion in bank loans to postpone payments until it restarts mining, people with knowledge said last month. A bankruptcy protection filing is among options being considered, one of the people said.

Evaluating the prospect of bankruptcy protection, Solitaire Aquila Ltd.’s Patrik Kauffman, who helps manage $11 billion in assets, said “it’s always difficult.”

“For the moment they are not operating,” Kauffman said by phone from Zurich. “It would be much better to reach out to bondholders and offer them something, and have a proactive discussion with them.”

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