May 15, 2020 / 10:11 AM / 23 days ago

China's Tianqi Lithium talking to banks about easing loan terms

* Top lithium producer has to repay $1.9 bln of Citic loan in Nov

* Has bond coupon payment due in May and owes Australia JV money

* M&A deal that piled debt on firm agreed almost exactly 2 yrs ago

By Tom Daly

BEIJING, May 15 (Reuters) - China’s Tianqi Lithium , one of the world’s top lithium producers, said on Friday it was talking to banks about adjusting the terms of its debt as a key repayment on a loan looms and the lithium market tanks.

The company previously said it was weighing asset sales or bringing in strategic investors after a plunge in prices for lithium, a key ingredient in electric vehicle batteries, left it struggling to repay a multibillion-dollar loan taken out to fund a major acquisition in 2018.

In response to a question on an interactive investor platform on Friday, Tianqi said it was “actively” communicating with various partner banks with regard to “adjusting the maturity structure of the debt, relaxing loan conditions and other measures” to ease its liquidity problems.

It agreed to buy a 23.8% stake in Chilean miner Sociedad Quimica y Minera de Chile, or SQM, in May 2018 for $4.1 billion, most of which came from a $3.5 billion syndicated loan led by state-owned bank Citic Group.

Around $1.9 billion of that loan is due to be repaid by November 2020, the company said, answering a separate question.

Tianqi, whose market capitalisation has slumped well below the price it paid for the SQM stake, said it was also communicating with local governments, regulators and creditors to safeguard credit lines.

Prices for lithium AM-99C-LTCB have plunged more than 70% since Tianqi agreed the acquisition as supply overwhelms demand, which has now been hit by the coronavirus outbreak.

On top of the loan, Tianqi has a $5.6 million interest payment due on May 28 on a $300 million bond maturing in 2022. The yield on the bond has ballooned out to around 60%, according to Refinitiv Eikon data, as investors sell off on perceived higher risk of a Tianqi default.

Tianqi, which posted a 6 billion yuan ($845 million) net loss in 2019, has been downgraded by ratings agency Moody’s on four separate occasions since September and is now rated at the Caa1 junk grade.

The Chengdu-based firm also owes around $100 million to its Australian joint venture Talison Lithium, which operates the giant Greenbushes lithium mine and an on-hold processing plant at Kwinana.

Tianqi has been linked with the sale of part of its 51% stake in Talison, in which it partners U.S.-based Albemarle Corp , as it looks to cut debt.

($1 = 7.0987 Chinese yuan renminbi)

Reporting by Tom Daly; additional reporting by Min Zhang in Beijing, Melanie Burton in Melbourne and Andrew Galbraith in Shanghai; editing by Mark Potter

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