| Mon 4 Sep 2023, 8:10 | | BHP GROUP LIMITED - Court Ratifies Samarco's Judicial Reorganisation Plan |
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Court Ratifies Samarco's Judicial Reorganisation Plan
BHP Group Limited
BHP Group Limited ABN 49 004 028 077
Registered in Australia
Registered Office: Level 18, 171 Collins Street
Melbourne VIC 3000
Share code: BHG
ISIN: AU000000BHP4
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 by release by Stefanie Wilkinson, Group Company Secretary.
Sponsor: J.P. Morgan Equities South Africa Proprietary Limited
BHP Group Limited ABN 49 004 028 077
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BHP Group Limited ABN 49 004 028 077
Date: 04-09-2023 08:10:00
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