Banter and General Comments, page-12961

Nemaska Lithium obtains protection against its creditors

Photo: Nemaska Lithium Work on the Whabouchi project of Nemaska Lithium in Nord-du-Québec has been suspended to control the level of liquidity.
François Desjardins
December 27, 2019

Nemaska Lithium has obtained Superior Court protection against its creditors, the company said this week, stressing that this is the best decision because it will allow it to work on the financing of its Whabouchi project, composed of a deposit near James Bay and the construction of an electrochemical plant in Shawinigan.


One of the challenges that Nemaska Lithium has faced in the past year, recalls the report produced by PricewaterhouseCoopers (PwC) on December 23, is related to construction costs higher than expected when the company solicited investors' money last year.

The total initial costs were estimated at around 875 million. In February 2019, however, the company, which has its sights set on the market for batteries for electric vehicles and energy storage, announced that an additional 375 million would be required.

The mine was expected to be ready in the second half of 2019, followed by the plant in the second half of 2020. According to the PwC report, the mine is currently 52% complete, compared to 4% for the plant. Work has been suspended at both locations to control the level of liquidity, he said.

The use of creditor protection came after analyzing "all possible alternatives," Nemaska Lithium said in a statement released Monday evening, the same day as the filing of its application under the Act on the companies' creditors arrangements (CCAA).

"The company was also unable to adequately restructure its business due to a combination of higher than expected construction costs, the current state of the financial markets and the company's inability to find a suitable solution as part of its previously announced strategic review process, ”the statement said.

The management of the company remains in control of daily operations and the board of directors will remain unchanged, decreed the order of the Superior Court.

Discussions with an investor

The company has spoken with British investor Pallinghurst this year about a potential investment of $ 600 million. The exclusivity period was scheduled to end on December 31, 2019. Last week, says the PwC report, Pallinghurst advised Nemaska that it would not extend the exclusivity period beyond December 31 and that it “n 'is unwilling' to discuss the investment conditions of its initial proposal. These conditions had to be met by December 31. “The investment proposal cannot be implemented before the end of the period. At the time of writing, Le Devoir was awaiting clarification from Nemaska.

Another problem concerns the disagreement between Nemaska and the US $ 350 million bond trustee that the company issued in May 2018. Since the project conditions were not met, Nemaska did not used this capital and believed that she was released from her obligations. The trustee, Nordic Trustee AS, instead estimates that Nemaska should pay a penalty of US $ 93 million. This litigation will be heard by the Court in February 2020. (The court recently ordered that the $ 350 million be returned to bondholders.)

Transactions on Nemaska Lithium shares on the Toronto Stock Exchange have been suspended until the TSX assesses the company's eligibility for continued listing. "If the common shares are delisted from trading on the TSX, the company could request their re-listing after the CCAA proceedings are completed," said the company.

https://www.ledevoir.com/economie/569829/nemaska-lithium-obtient-la-protection-contre-ses-creanciers