China’s Tianqi Lithium gets one-month reprieve on $1.9b loan repayment

Lithium mine. Photo: Reuters

China’s Tianqi Lithium Corp said on Monday it had signed a letter with a syndicate of banks to extend by a month the maturity date on $1.884 billion of loans that were due for repayment at the end of November.

Tianqi, one of the world’s top producers of lithium chemicals used in electric-vehicle batteries, had repeatedly said its operations could be severely impacted if it did not repay the money, which was used to acquire a 23.8% stake in Chilean miner SQM in 2018, by the due date.

The last-minute reprieve gives the company and its lenders, led by China Citic Bank, until Dec. 28 to sign a modified loan agreement, Tianqi said in a Shenzhen Stock Exchange filing. Otherwise, Tianqi will have to pay back the money by that date.

The two sides are “actively negotiating the key terms,” of the modified loan agreement, it said.

If the conditions of the extension letter cannot be met, however, the repayment deadline will not be extended at all, the filing said, triggering a default. Tianqi must also repay outstanding interest on the loans by Dec. 10.

Daiwa Capital Markets said in a note it saw the extension as a way to buy time for Tianqi.

“We expect Tianqi to reveal a solution for the repayment of the annexation loan within a month, potentially a strategic investment or sale of Australian assets amid a rebound in the lithium price,” it said.

Tianqi, alongside Albemarle Corp, jointly operates the Greenbushes lithium mine in Australia, where it also owns the Kwinana processing plant.

China Citic Bank did not immediately respond to a request for comment outside normal business hours.

Tianqi paid $4.1 billion for the SQM stake, taking on $3.5 billion of debt to finance the acquisition.

But lithium carbonate prices AM-99C-LTCB in China have plunged around 70% since it agreed the deal, amid oversupply, leaving Tianqi in the red and unable to pay back its borrowings.

($1 = 6.5773 Chinese yuan renminbi)

Reuters

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

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