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Trafigura, a commodities operator, has announced plans to take control of Nyrstar, Europe's largest zinc producer, as part of a debt restructuring deal that will save more than 4,000 jobs.
As part of the proposed recapitalization, Nyrstar's creditors are asked to exchange their debt for perpetual securities and other instruments issued by Trafigura.
The transfer would put Nyrstar in control of the world's second-largest metals trader, but only if it can get the support of 75 percent of its creditors.
Nyrstar said Monday that nearly 45% of its bondholders were in favor of the recapitalization agreement and had signed a "blocking" deal. The company's banks have also expressed support for the deal, although they have not yet signed officially, he added.
While Nyrstar is trying to gain support from banks and its other lenders, Trafigura has said it has agreed to provide a $ 250 million line of credit so the cash-strapped company can continue to operate. Trafigura has already written off its stake of more than 20% in Nyrstar.
Nyrstar operates a handful of mines in North America as well as several zinc and lead smelters in Europe, the United States and Australia. These plants take concentrates of zinc and lead and turn them into refined metal.
The debt problems of the company go back to an untimely expansion of the mining sector. As of 2009, the company bought a series of mines. A management team said that rock mining was a structurally more profitable business than the merger.
"Nyrstar has faced significant financial and operational challenges in recent years, but it also has very strong industrial and mining operations on which we can build a stable future," said Jeremy Weir, Executive Chairman of Trafigura.
"We believe that the proposed debt restructuring is the best possible solution for all stakeholders despite significant and painful losses. The alternative would have posed an imminent risk to the future of the Nyrstar Group, resulting in significant losses for all stakeholders, including the approximately 4,100 employees of the company. It is important to note that this agreement protects jobs and provides a stable environment and a long-term platform for Nyrstar's major market operations around the world, "he added.
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