Sherritt Bondholders Push Rival Rescue Plan Amid Liquidity Crisis

Bondholders of Sherritt International Corp. are urging the Toronto-based miner to consider a competing recapitalization proposal, according to reporting from the Financial Post. The move comes as the company navigates a liquidity crisis triggered by U.S. sanctions on Cuba, which forced Sherritt to halt production at its nickel and cobalt mine in February due to energy shortages.

Sherritt is currently in exclusive negotiations to sell a controlling stake to Gillon Capital LLC, a Texas-based family office owned by Ray Washburne, a former adviser to Donald Trump. However, holders of Sherritt's 2031 notes stated Friday that a group of "credible" strategic and financial investors has developed an alternative refinancing plan. While the bondholders did not disclose the identities of these investors, they argued that the Gillon Capital transaction should not be viewed as the only executable path forward.

The standoff underscores the urgency of Sherritt's financial position. Last month, the company warned that doubts surrounded its ability to keep operating as a going concern, and that it would not have enough cash to repay its debt if lenders called a default and required early repayment.

In an effort to maintain operational flexibility and address immediate cash needs, the bondholder group reported that it has provided Sherritt with an emergency financing term sheet. The group noted that while an organized creditor constituency is ready to engage, previous interactions have not matched the urgency of the company's situation.