October 10, 2019 / 1:34 PM / 12 days ago

Belgium's financial regulator opens probe into Trafigura's Nyrstar: FSMA

LONDON (Reuters) - Belgium’s Financial Services and Markets Authority has opened a formal investigation into zinc group Nyrstar, now majority-owned by commodities trader Trafigura, an FSMA spokesman said, without providing additional details.

FILE PHOTO: Trafigura logo is pictured in the company entrance in Geneva, Switzerland March 11, 2012. REUTERS/Denis Balibouse/File Photo

Nyrstar underwent a major restructuring this year to avoid bankruptcy, during which Trafigura stepped in to raise its stake to 98% from 24.4% previously.

Nyrstar is one of the world’s largest zinc smelting companies with smelters across northern Europe, the United States and Australia. It also has zinc mines in North America.

The FSMA issued a warning on the transparency of Nyrstar’s accounting in June and began the formal investigation last month.

“The FSMA deems that the shareholders do not have sufficient information to be able to approve the annual financial statements for the financial year ended on 31 December 2018 at the general meeting of 25 June 2019,” the FSMA said.

A spokesman for Nyrstar NV, a holding company for the remaining 2% stake that is still listed on the Belgian stock exchange, said the firm had not been informed of any “new enquiry by the FSMA”.

The restructuring saw all lenders take significant haircuts or agree to extended repayment schemes, leaving a bitter aftertaste.

Minority shareholders are now looking to take legal action following the restructuring.

“On the basis of similar grounds to the issues raised by FSMA, minority shareholders are preparing legal action against all involved,” Laurent Arnauts, lawyer at Watt Legal representing the minority shareholders, said.

Nyrstar’s spokesman declined to comment on the possible lawsuit.

He added that the firm has “provided to the auditor all the relevant information available to it and has worked closely with the auditor for many months, dedicating very substantial resources to this, so as to bring the audit process to its conclusion in the financial statements which were issued on 27 September 2019.”

Trafigura declined to comment on the FSMA announcement or the possible legal action and referred Reuters to a previous statement about the restructuring of Nyrstar.

“The restructuring of Nyrstar’s balance sheet was necessitated by the financial stress being experienced by Nyrstar due to its unsustainable levels of debt,” the statement said.

“The commercial agreements entered into by Nyrstar with Trafigura were on market based terms and were not the cause of Nyrstar’s financial situation.”

Reporting By Julia Payne, editing by Deepa Babington and Alexandra Hudson

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