Nyrstar shareholders in Trafigura lawsuit
Minority shareholders in major zinc producer Nyrstar are seeking €1.48 billion ($1.63 billion) in damages from commodities trader Trafigura over the restructuring of the Belgian firm, the shareholders’ lawyer said on Saturday.
Nyrstar was on the brink of bankruptcy before Trafigura stepped in. The Geneva-based trader has a 24.4 percent stake in the Belgium-listed firm.
The statement outlines the total damages sought by the minority shareholders and marks an escalation in the fight for Nyrstar after several months of legal action. As part of the deal to save Nyrstar, lenders had to write off part of their debt or agree to extended repayment schemes while all the firm’s operating assets were transferred into a new subsidiary called Newco 2 based in the UK, in which Trafigura holds a 98 percent stake.
The remaining shareholders were then left with a 2 percent stake in the operating assets through a holding company called Nyrstar NV.
Nyrstar is one of the world’s largest zinc smelting companies with plants across Northern Europe, the US and Australia. It also has zinc mines in North America.
The firm’s shareholders allege that Nyrstar’s board did not pursue profit by acting against its legal duties and committed fraud. As part of the lawsuit, the shareholders will seek to nullify the decisions of Nyrstar’s board that accepted the “lock-up agreement,” or restructuring terms, in April.
As an alternative to canceling the deal, the shareholders are seeking €980 million ($1.08 billion) in compensation from Trafigura. Nyrstar said on Friday that it had received an unsolicited offer from Trafigura to buy the 2 percent stake for €22 million ($24.29 million). Alongside the allegation of fraud, the shareholders allege that Genevabased Trafigura abused its position as the single largest shareholder since 2015 and will seek €500 million in damages.
A spokesman for Nyrstar said: “Nyrstar NV notes that it has not been served with any legal claim and considers the allegations made via the media...to be without basis. In the event that any such legal claim is made, Nyrstar will strongly defend itself.”