On Wednesday, Horizonte Minerals announced that continued negotiations with secured creditors and potential investors regarding restructuring for its Araguaia project in Brazil were yielding little in the way of hope for investors.
Senior lenders have agreed to extend waivers, deferring accrued interest payments until May 15th, as discussions explore options to recover value for creditors. Shareholders, unfortunately, are of little consequence in these discussions.
Scenarios under consideration include raising financing at the subsidiary level, disposing of the Araguaia project while maintaining its viability, liquidating assets, or leveraging Brazilian laws to maximise creditor recovery while minimising liabilities.
The outcome in any of these scenarios will be unfavourable for shareholders, and the company said it believes these options are unlikely to yield any value for equity investors.
If no further extension is granted by senior lenders, deferred interest will become immediately payable on May 16th. Failure to pay could result in the cancellation of undrawn funds, acceleration of outstanding debt, and potential enforcement of lender security over the group’s assets.
The pressure is mounting on Horizonte Minerals, and its fall from grace could be coming to a conclusion. If a deal is not secured soon, Horizonte Minerals may be the next London-listed firm to enter administration.
Horizonte’s Brazilian subsidiary has secured a 60-day injunction until May 15th, preventing debt enforcement to allow restructuring negotiations.
The company has working capital until mid-May, subject to creditor discussions, project expenditures, and potential cost-saving measures. The clock is ticking.
Horizonte Minerals’ demise is not only a real shame for investors but for the wider London markets. It had the potential to be a powerhouse producer and a text book success story for the junior natural resource sector.
