Minister Vapaavuori: Talvivaara's Future in the Balance
According to Minister of Economic Affairs, Jan Vapaavuori, Talvivaara's application for reorganisation proceedings bears testimony to a situation so critical that the firm's entire future can seriously be said to be hanging in the balance.
This morning, the Board of Directors of Talvivaara Mining Company Plc. issued a press release stating that the company was applying for reorganisation proceedings. The firm's shares are listed on the London Stock Exchange and NASDAQ-OMX Helsinki.
- Under the current circumstances, the company views reorganisation proceedings as a way of stabilising its operations. However, opting for this alternative without a clear financial plan is an even starker illustration of the impasse reached in the previous negotiations and the critical situation faced by the company, Vapaavuori adds.
Talvivaara's quarterly report issued on 7 November 2013 confirmed the gravity of the company's financial difficulties. For example, Talvivaara itself calculates that its financial position has deteriorated even further than expected. This has led the company to announce negotiations over external financing, while also preparing for reorganisation or bankruptcy proceedings as a fall-back position. In today's announcement, Talvivaara adds that additional financing will be a requirement for entering and completing reorganisation proceedings. The firm has also announced that it has conducted intensive discussions on possible financing with various stakeholders, referring to a proposal for EUR 40 million which the investor candidates have so far rejected.
The reorganisation proceedings represent an attempt to return this highly leveraged company to financial health through a financial restructuring programme. This will mean restructuring its debts and liabilities, which in most cases entails resizing the debts. For reorganisation proceedings to begin, the applicant's business operations must be viable and financing must be adequate for staying the course of the reorganisation process. The district court will decide on whether or not reorganisation proceedings can be initiated.
- The court is now considering whether Talvivaara qualifies for reorganisation proceedings. The State has kept a close eye on the firm's situation and, under the leadership of the MEE (Ministry of Employment and the Economy), it actively participated in negotiations held last week to secure financing that will enable the firm to continue and to manage its environmental risks. These negotiations have been conducted on the principle that financing must be sought on market terms: the State cannot bear the main responsibility. The highly intense talks have involved consideration of several alternatives, but without finding a solution that will secure Talvivaara's future. No actual negotiations with the State are currently under way, states Vapaavuori.
He emphasises that the company must now ensure that the mine operates responsibly.
- At the moment, the number one priority is to bring the environmental problems caused by the Talvivaara mine under control. This must not be jeopardised by issues such as the announced closure of the metals plant in the mine area. The company will not be relieved of its environmental responsibilities, whether in the current situation or in any reorganisation proceedings.
The minister states that the MEE will remain in contact with the company and, where possible, participate in negotiations on arranging a financial package on market terms, in which private operators will at least match the State's role in any rescue.
It is important to note that this company is listed on the stock exchange. Stock exchange regulations and non-disclosure obligations prevent us from publicly announcing every detail on the company and the financial negotiations.
Inquiries: Pete Pokkinen, Special Adviser to the Minister of Economic Affairs, tel. +358 40 756 7180