REG - BHP Group Limited - Court Ratifies Samarco's JR Plan

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04/09/2023 07:00

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RNS Number : 2026L  BHP Group Limited  04 September 2023

Exchange release
4 September 2023

 

Court Ratifies Samarco's Judicial Reorganisation Plan

On 1 September 2023, the Second Business Court of Belo Horizonte, State of
Minas Gerais, Brazil ratified the Judicial Reorganisation Plan of Samarco
Mineração S.A. - Em Recuperação Judicial (Samarco) as part of the ongoing
Samarco Judicial Reorganisation proceedings.

Samarco is owned 50% by BHP Billiton Brasil Ltda (BHP Brasil) and 50% by Vale
S.A (Vale) and filed for Judicial Reorganisation in April 2021 after multiple
enforcement actions by certain financial creditors which threatened Samarco's
operations.  The Judicial Reorganisation is an insolvency proceeding in
Brazil and Samarco's operations have continued during the Judicial
Reorganisation proceeding.

Following the court ratification, the next steps will include Samarco entering
into definitive debt restructure agreements with its creditors to implement
the debt restructure. The restructure of Samarco's debt, including payments to
employees and suppliers and the issue of new unsecured debt to Samarco's
financial creditors, is expected to be completed in the first half of FY2024.

The court's ratification of Samarco's Judicial Reorganisation Plan follows
support of the plan by a majority of Samarco's financial creditors in July
2023 as required under Brazilian bankruptcy law.

The Judicial Reorganisation Plan contains the terms of the debt restructure
plan and under these terms, Samarco's existing financial debt will be
exchanged for up to US$3.7 billion of long-term unsecured debt. The new
long-term debt will remain non-recourse to Samarco's shareholders, BHP Brasil
and Vale. This outcome will enable Samarco to restructure its financial debts
and establish a stable financial position to rebuild its operations and
strengthen its ability to meet its Renova funding obligations.

The Judicial Reorganisation Plan will not impact the Renova Foundation's
ability to continue to implement the remediation and compensation programs
under the Framework Agreement.  The Framework Agreement entered into between
Samarco, Vale and BHP Brasil and the Federal Government of Brazil, the states
of Espirito Santo and Minas Gerais, and certain other public authorities in
March 2016 established the Renova Foundation to implement environmental and
socio-economic programs to remediate and provide compensation for damage
caused by the Samarco dam failure.

Samarco will continue to have primary responsibility to fund the Renova
Foundation and each of Vale and BHP Brasil will continue to have secondary
responsibility to fund 50% of the Renova Foundation if Samarco does not meet
its funding obligations under the Framework Agreement.  Under the terms of
the Judicial Reorganisation Plan, Samarco's funding of the Renova Foundation
will be capped at US$1 billion for the period CY2024 to CY2030.  BHP Brasil
and Vale will be required to provide funding to the Renova Foundation during
this period to the extent that the funding amount required exceeds the US$1
billion cap.

BHP provided an update to the Group's provision for the Samarco dam failure in
its 2023 Annual Report and BHP considered the funding cap along with Samarco's
long-term forecast cash flows, when determining the Samarco Fundão dam
failure related provision recognised in BHPs Financial Statements at 30 June
2023.  Refer to note 4 'Significant events - Samarco dam failure' in the
Financial Statements of BHP's 2023 Annual Report for further information about
the provision.

Further information on the Samarco Judicial Reorganisation can be found at
samarco.com.

Authorised for release by Stefanie Wilkinson, Group Company Secretary

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