What’s new: Chinese battery giant Contemporary Amperex Technology Co. Ltd. (CATL) won approval for its 6.4 billion yuan ($945 million) debt restructuring plan in the bankruptcy of a lithium mining company it is trying to buy.
A court in Sichuan province cleared CATL’s plan for Sinuowei Mining Development Co. Ltd., clearing the last obstacle for the battery giant to gain control of the mining company. Sinuowei owns the license to build a mine in Sichuan to tap into a reserve of 24.9 million tons of lithium ore.
Under the debt restructuring plan, CATL will provide 1.64 billion yuan to repay Sinuowei Mining’s bankruptcy fees and debts and 4.8 billion yuan to Sinuowei investors in exchange for the company’s entire equity.
The background: Sinuowei Mining filed for bankruptcy in a local court in 2021 due to a debt crisis. Its assets were valued at 201 million yuan, and the court confirmed debt amounting to 1 billion yuan.
Sinuowei was an asset that nobody wanted until 2022, when lithium prices went wild. In the auction of a majority stake in Sinuowei Mining, multiple bidders drove the price to up to 3.68 billion yuan. CATL’s offer exceeds a reasonable expected price, a bidder said.
Lithium posted an extraordinary 1,200% gain over two years as supply struggled to keep up with rampant demand for electric vehicle batteries.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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