Nyrstar says restructuring to bring ‘very substantial’ shareholder dilution, defers interest payment

Nyrstar NV shares were down by 12% on the morning of Friday March 15 after the company indicated that its continuing capital restructure will involve a debt-for-equity swap to bondholders.

“The economic effect for the shareholders of Nyrstar NV of the restructuring transaction would be a very substantial dilution,” the world’s second-largest zinc producer said in a note on the Euronext exchange this morning.

Negotiations with stakeholders over a combined €850 million ($961.4 million) of debt repayments due this September and in 2024 are “constructive” and have led to the deferral of €31.6 million in interest coupons due today, Nyrstar said.

The announcement is the first public acknowledgement from the company that equity holders, foremost being trader Trafigura, will be affected by the restructuring, with shares in the company falling to one-month lows this morning.

The company’s share price recently stood at €0.37 per share, down by 12% from an opening price of €0.42 per share on Friday.

All stakeholders need to come to an agreement before April for auditors to sign a going concern statement on Nyrstar’s 2018 results, according to Belgian law.

Any disruption to zinc and lead producing assets would likely have a significant effect on concentrate treatment charges (TCs), metal premiums and outright prices, market sources told Fastmarkets.

“If Nyrstar closes for even a few days, spot [zinc] TCs are going to hit $400 [per tonne],” a trader source said.

Fastmarkets’ monthly assessment of spot zinc TCs, cif Asia Pacific, stood at $210-250 per tonne at the end of February, though terms have risen since then.