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Talvivaara: Terrafame sale, payment actions may lead to bankruptcy
By Caroline Salls
Pittsburgh, June 3 – Talvivaara Mining Co. plc said Terrafame Ltd. notified it that Terrafame entities will no longer proceed with an arrangement concerning the sale of Talvivaara’s Sotkamo mining operations assets.
According to a Talvivaara news release, Terrafame also informed the company that Winttal Ltd. has assigned to Terrafame all its rights, title, benefit and interest under a zinc in concentrate purchase agreement and a loan and streaming holiday agreement originally held by Nyrstar Sales & Marketing AG.
Terrafame also requested immediate payment of a €12.8 million receivable under the streaming holiday agreement.
Talvivaara said its liability under the zinc purchase agreement is based on the guarantee issued in connection with a €203.4 million termination payment by former subsidiary Talvivaara Sotkamo Ltd. However, as a result of intercreditor arrangements in force, Talvivaara said it believes it cannot make any payments in relation to the termination sum if full payment has not been made to Talvivaara’s lenders having receivables with a higher ranked priority.
The company said Terrafame claimed it would offset the receivables against the receivables of Talvivaara from Terrafame under the service and lease agreements between the parties if the demanded payment is not made.
Talvivaara said it is assessing Terrafame’s announcements and the measures to be taken in response, but it does not currently have sufficient cash reserves to make the required payment in full.
The company said there is a significant risk that Terrafame’s demands will endanger the continuance of Talvivaara’s corporate restructuring proceedings and may lead to bankruptcy.
Talvivaara is a nickel mining company based in Espoo, Finland.
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