The Steering Committee of the Ad Hoc Group of Samarco Creditors Announces Debt Enforcement Action in Minas Gerais

NEW YORK--(BUSINESS WIRE)--The Steering Committee of the Ad Hoc Group of Samarco Creditors announced today that an enforcement action was filed on February 8, 2021 against Samarco Mineração S.A. (“Samarco”) in the Judicial District of Belo Horizonte – Minas Gerais with the support of the Steering Committee. This action seeks repayment of a $125 million promissory note—one of several debt instruments on which Samarco is in open default. Today, the judge overseeing the action issued a decision ordering Samarco to pay the debt within three days from service of process under penalty of attachment of assets. This litigation follows previous enforcement actions supported by the Steering Committee for repayment of more than $2.7 billion owing under Samarco’s senior notes, which are currently pending before the United States District Court for the Southern District of New York.

The Steering Committee was compelled to pursue this litigation as a last resort, following Samarco’s prolonged and ongoing refusal to negotiate a consensual restructuring transaction. Samarco has failed to service the debt in its capital structure since the catastrophic dam collapse at its Mariana facility in November 2015. For several years, creditors have refrained from debt-enforcement litigation, providing forbearance and support as Samarco sought to address the environmental damage resulting from the dam collapse and obtain regulatory approvals necessary to resume operations. During this time, the Steering Committee has also sought to engage constructively with Samarco and its shareholders, Vale and BHP, to negotiate the terms of a consensual financial restructuring that would allow for Samarco to resume its operating business in a safe and value-maximizing manner and avoid unnecessary litigation. But Samarco has failed to engage with the Steering Committee. Indeed, since January 2019, Samarco has refused to even discuss a restructuring—leaving the Steering Committee with no choice but to pursue available remedies in court through this action and others that may follow in the near term related to open defaults under Samarco’s various debt instruments.

In deciding to initiate this enforcement action, it has been taken into consideration that the shareholders of Samarco are principal obligors of all financial compensation and environmental remediation actions due as a result of the Fundão dam collapse. The Steering Committee expects that Vale and BHP will honor the commitments made to the victims and all affected parties.

The Steering Committee has been and remains willing to engage in good faith negotiations with Samarco and hopes that additional enforcement actions are not necessary.