The Tschudi Group is very pleased to announce that they have reached an agreement for the acquisition of the business of Sydvaranger Gruve AS – the Sydvaranger iron ore mine.
It is well known that all effort has been made by the Administrator and the main creditors to find solutions that could secure future operations at the plant in Kirkenes.
There have been discussions with several potential investors, but no sale has been concluded prior to this point, primarily due to the continuing low iron ore prices.
In order to secure the option of reopening the mine, the bankruptcy estate and the Tschudi Group have now agreed that companies controlled by Felix H. Tschudi will acquire the mine, together with the most critical production assets as per an agreement with the bankruptcy estate of 1st April 2016. An agreement has also been entered into with DNB Leasing for the purchase of parts of the mobile mining fleet. Tschudi’s ambition is to recommence mining activities when market conditions allow for it, while at the same time inviting partners to contribute.
The total transaction value is NOK 78 million, partially payable in tranches over time and being subject to achieving agreed milestones. In addition, royalties for the estate have been agreed, based on an agreed production level and iron ore prices. Completion of the sale is conditional upon the Competition Authority’s approval.
Peter Steiness Larsen, CFO in Tschudi Shipping Company AS and former Chairman of the Board of Directors of Sydvaranger Gruve AS comments: “We are delighted that we, with the support from the Administrator and the main creditors, DNB and Innovation Norge, have been able to reach an agreement acceptable to all parties. All parties have gone to great lengths in order to reach a solution that will secure an opportunity for future activity in the mine. The immediate plan is to keep the mine “warm” – continue with a certain level of maintenance while being very cost conscious until the iron ore market recovers and new financing (debt and/or equity) is secured making renewed activity possible. This will come with a cost, but the potential for both the local community and the Company is significant if successful.”
“The bankruptcy estate is very pleased that the estate in consultation with secured creditors has, after long and constructive negotiations, successfully reached an agreement with the Tschudi Group, which will secure the basis for a possible continuation of mining activities in Sør-Varanger”, states Administrator Mr. Leif Petter Madsen from the law firm Wikborg Rein & Co.
“On behalf of the secured creditors DNB and Innovation Norway, we are very pleased to have contributed to a solution that preserves both values and the opportunity for renewed operation” says Morten Støvre, Division Director of DNB Corporate in northern Norway and Nils Roald, Credit Director of Innovasjon Norge.