Sherritt bondholders push miner to weigh rival rescue plan

Bondholders of troubled miner Sherritt International Corp. said a group of “credible” investors has crafted a plan to refinance the company in a proposal that competes with an offer from an ally of US President Donald Trump.

Holders of Sherritt’s 2031 notes said in a statement Friday they had reviewed an “alternative recapitalization proposal” that they believe should be considered alongside a separate offer from Gillon Capital LLC, the Texas-based family office of former Trump adviser Ray Washburne. 

The bondholders said the competing proposal was backed by strategic and financial investors, but didn’t identify them or disclose who submitted it.

“Stakeholders should understand that an organized creditor constituency exists and is prepared to engage, but that engagement has not advanced in a manner consistent with the urgency of the company’s circumstances,” the bondholder group said.

Toronto-based Sherritt is one of Cuba’s largest foreign investors. But the company has been in turmoil since the Trump administration tightened sanctions on Cuba and made it impossible for the country to import enough oil to meet its needs.

Sherritt halted production at its nickel and cobalt mine in eastern Cuba in February because of the energy crisis. After initially moving to dissolve its joint venture with a Cuban state-owned company and exit the island, Sherritt announced it had struck a preliminary agreement to sell a controlling stake to Gillon Capital.

Sherritt and Gillon are now in a period of exclusive talks, but the 2031 bondholder group said it “does not believe that the proposed transaction involving Gillon Capital LLC should be viewed as the only available or most executable path forward.”

Last month, the company warned that its ability to continue as a going concern was in doubt because of Trump’s sanctions order, saying it wouldn’t have enough cash to repay its debt if lenders declared a default and demanded early repayment.

In addition to advocating for the consideration of the alternative proposal, the bondholders also said Friday they had provided Sherritt with an emergency financing term sheet to meet near-term liquidity needs and preserve operational flexibility.

(By Sybilla Gross and Derek Decloet)