[Update includes background on sale and recent actions by the company to secure its balance sheet]
Chicago 07/01/2016 - Nyrstar NV has launched the formal sales process for all or a majority of its mining assets, the company announced on Thursday.
Originally announced on November 9, the effort is being led by BMO Capital Markets Limited, Lazard & Co., Limited and Lazard BVBA/SPRL.
The company owns eight mines in the US, Canada, Honduras, Peru and Chile with annual zinc in concentrate production of around 278,000 tonnes.
The sales process is expected to last several months and the company has already received interest from potential buyers, it said.
The sale of Nyrstar’s mining portfolio has the potential to raise sizable cash proceeds, given the mining assets’ book value of approximately 623 million euros as of June 2015, according to November report from ratings agency Moody's.
“A sale would allow the company to reallocate its constrained liquidity to its more profitable metal-processing activities and speed up progress on a large multi-year investment programme to upgrade several smelters and improve their productivity and profitability,” Moody’s said.
The company is also major processor of zinc with annual smelter capacity of about 1.1 million tonnes of special high grade (SHG) zinc and 235,000 tonnes of lead. The more profitable smelter assets are not included in this sales process.
In recent months, Nyrstar has attempted to preserve its balance sheet by including an equity increase, a zinc prepay financing deal and a potential mining division divestment.
Nyrstar announced a 250-275 million euro ($269-296 million) rights offering, in which shareholder Trafigura plans to subscribe for up to 125 million euros.
Additionally, the company launched a metal prepayment financing plan of $150 million, arranged by Deutsche Bank and is part of the offtake agreement to the physical delivery of refined zinc to Trafigura.
Falling zinc prices – last trading at $1,494 per tonne on the London Metal Exchange (LME) – led to the mining division reporting negative EBITDA 17 million euros and burned through approximately 90 million euros of cash during the first nine months of 2015.
The company is also dealing with an existing retail bonds, which total 415 million euros and are due in May 2016, Moody's said.
Nyrstar share prices were last down eight percent to €1.32 on the Centrais Elétricas Brasileiras S.A (EBR).
(Editing by Tom Jennemann)