Katanga Mining Limited (KAT)

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Down it goes:
Debt Structure

The court action by Gecamines means Katanga needs to urgently reduce a multi-billion-dollar capital shortfall at the Kamoto subsidiary.

Glencore and Katanga have made their investments in Congo as shareholder loans or prepayments for metal. While the structure is common among international investors in the country, missed output targets and a 10 percent interest rate mean that Kamoto’s total debt reached $9.2 billion through December, corporate filings show. That’s more than three times Katanga’s market value and has led to a $4.2 billion shortfall in working capital, which Katanga needed to resolve before January, according to local law.

Read more about Katanga unit Kamoto Copper’s capital shortfall

A first hearing is scheduled for May 8 and Katanga could get another six months to resolve the issue, the company said. Its options include forgiving a portion of the debt, which could impact Katanga’s future cash flow from the project, it said