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Talvivaara mining company to apply for corporate reorganization

TalvivaaraThe financially embattled Finnish mining company Talvivaara will apply for corporate reorganization – and plans to change its organization to support reorganization.

Talvivaara and its operating subsidiary Talvivaara Sotkamo Ltd have concluded that each company should file for a corporate reorganization, the company says in its press release

In order for Talvivaara and Talvivaara Sotkamo Ltd to qualify for a corporate reorganisation, the Talvivaara Group will require additional liquidity during the reorganisation proceedings for the payment of costs of the reorganisation proceedings and payment of new indebtedness incurred after the filing for reorganisation.

No additional liquidity available

Talvivaara’s liquidity position had weakened more than anticipated. In addition, Talvivaara advanced discussions with certain stakeholders concerning a financing solution that would address Talvivaara’s current liquidity needs. These discussions have shown that additional liquidity would not be available for as part of a voluntary restructuring.

Availability of additional funding would facilitate an orderly reorganisation process in a court-supervised environment with the objective of attracting long-term capital and right-sizing the capital structure of Talvivaara.

Talvivaara has announced massive third quarter losses. The company said that if it doesn’t get a quick infusion of cash it will consider filing for bankruptcy. Talvivaara set up a share issue last spring to try to bring in new equity, and succeeded in raising 260 million euros.

Planned rationalizations of operations

In addition to applied reorganization program, Talvivaara changes its organization to support the reorganization program and rationalization of operations.

Talvivaara believes that the planned actions will accelerate the efficiency programme started last summer. The company said in the press release, that the actions will also increase productivity and lower operational expenditure and help create an organization that better reflects the current situation of the group.

Talvivaara estimates that the planned changes may cause redundancies, lead to part-time employments and/or lay-offs and may have employee impact on the whole staff.

According to company, the short-term actions to optimize production and operational expenditure consist of, among others, a shut-down of the metals recovery plant, which takes effect immediately and is estimated to be approximately one month in duration, and a temporary stoppage of ore production.

The Company plans to discontinue ore production in the coming weeks for approximately six months. The temporary discontinuation of ore production may have a negative impact on water management and it will likely slow down the ramp-up of production to its planned capacity.