Talvivaara still negotiating operations sale; funds access uncertain

By Caroline Salls

Pittsburgh, Feb. 27 – Talvivaara Mining Co. plc said the negotiations for the sale of the mining operations of its Talvivaara Sotkamo subsidiary are still ongoing, and there is no clarity on the continuance of the operations or the entity that will take over the operations.

According to a company news release, parent company Talvivaara has continued its operations for the time being with the target of securing sufficient third-party financing to participate, as a member of a consortium, in the acquisition of the mining operations from the bankruptcy estate of Talvivaara Sotkamo.

While the financing negotiations continue, the company said it is financing its day-to-day operations by providing administrative and technical services and leasing critical machinery and equipment to the bankruptcy estate of Talvivaara Sotkamo.

Subsequent to Talvivaara Sotkamo’s bankruptcy, the parent company said it has declared €31.5 million, including €5.6 million of value added tax (VAT), of its sales receivables from Talvivaara Sotkamo as credit losses and received a refund of the associated VAT.

As of Friday, Talvivaara’s cash and cash equivalents amounted to €4.8 million, the release said.

Liquidity outlook

In light of its current cash position and the income expected from service and lease agreements of Talvivaara and Talvivaara Sotkamo’s bankruptcy estate, the company said it expects to have enough liquidity to continue its currently foreseen day-to-day operations as a going concern for the foreseeable future.

The company said its board of directors and management do not anticipate liquidation or bankruptcy for Talvivaara.

However, there is substantial uncertainty relating to the company’s ability to access funds for the proposed transaction, the release said. Even if it were successful in regaining partial ownership of the assets, Talvivaara said there is no certainty that the arrangement would provide sufficient liquidity for it to successfully complete its restructuring program in the long term.

In the event that Talvivaara cannot re-gain any ownership of the mining assets, the company said its continuation on a going-concern basis is unlikely to be feasible.

In addition, if Nyrstar was to demand repayment of €12.8 million in loans drawn by Talvivaara Sotkamo and guaranteed by the parent company, Talvivaara said it might not have sufficient cash reserves or access to additional liquidity to make the payment, affecting its ability to continue its operations as a going concern.

Talvivaara said its administrator has recorded €482 million of reorganization debt, including a €50 million guarantee for Talvivaara Sotkamo’s loans from Finnvera.

Under a preliminary restructuring proposal, the administrator has suggested a 97% haircut to all unsecured debt and an eight-year payment schedule. The administrator is also evaluating the possibility of allowing conversion of the reorganization debt into Talvivaara equity.

Minor debt repayment

On Feb. 5, the administrator decided to repay the company’s minor debts of less than €1,000 under an exception rule of the Finnish Act on Corporate Restructuring.

Specifically, a total of €15,672 has been paid to 40 creditors.

Helsinki-based Talvivaara Mining is a base metals producer with its primary focus on nickel and zinc.

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