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.
Felix H. Tschudi comments: "After a long process it is a great relief that the negotiations are now finalized. With the plant still being more or less intact, the chances of the mine reopening are significantly higher than if the mine had been dismantled and sold piece by piece. This agreement also paves the way for the reopening of the mine without excessive costs when the market turns. Throughout the process DNB, Innovation Norge and the Administrator have acted very diligently and maintained the plant well.”
“We are optimistic about our ambition to contribute to a continuation of the long and proud mining tradition in Sør-Varanger. Mining will continue to have an important role in Kirkenes and Kirkenes will have an important role as the industrial and logistics center for the Barents region. Since a recommencement of mining activity will take time, we will be totally dependent on support from stakeholders including authorities locally as well as nationally, suppliers and owners. In the long- term we believe that further local upgrading of the high quality iron ore from Sør-Varanger will be the key to success. We must become more than just a commodity supplier. This will ensure a more robust value creation making the Company less vulnerable for fluctuating market prices.” concludes Tschudi.
The Tschudi Group has been active in Kirkenes for many years and, in addition to initiating the reopening of the mine during the period 2006 - 2009, has also successfully developed the export of aggregates from Kirkenes. Further activities include: logistic services, oil transshipment from early 2000’s, the reopening of the bulk terminal and the regulation of KILA in order to create a large, central industrial and logistics area in Kirkenes serving the entire Barents region. The aim is for Kirkenes to be ready to offer services when needed. Tschudi’s acquisition of the business of Sydvaranger Gruve is part of the group’s ambition to support further development of industrial activities in Kirkenes.
For more information, please contact:
Peter Steiness Larsen; Mobil: +47 909 70 615; E-mail: email@example.com
For more information concerning the Tschudi group’s other activities in Kirkenes please contact:
Audun Celius; Mobil 952 77 290; E-mail: firstname.lastname@example.org