A corporate debt fight can look technical until the creditors holding most of the paper begin moving as a bloc. Sherritt International has reached that point. On September 8, Kyma Capital disclosed that holders controlling more than 50% of the outstanding principal of Sherritt’s 9.25% senior second-lien notes due 2031 had entered a cooperation agreement to act collectively in discussions over the company’s future. The move comes as Sherritt faces constrained liquidity, a halted metals refinery in Alberta, disrupted participation in its Cuba-linked operations and competing recapitalization proposals. The bondholder group does not itself decide the outcome, but its size gives it meaningful influence over any transaction that needs creditor support. What happens next could reshape Sherritt’s balance sheet, ownership and operating strategy at a time when nickel and cobalt processing capacity is strategically important to Canada and North America.
Majority Bondholders Turn Coordination Into Formal Leverage
The September 8 cooperation agreement is important because it converts a loose collection of creditors into a more organized creditor negotiating group. Kyma Capital said the participating holders beneficially own, or exercise control and direction over, more than half of the aggregate principal amount of Sherritt’s outstanding 9.25% senior second-lien secured notes due November 30, 2031. That is a creditor constituency as Sherritt considers recapitalization and restructuring alternatives.
Under the agreement, the holders formed an ad hoc noteholder group to engage with Sherritt and other stakeholders on recapitalization, refinancing, restructuring, sale or other transaction. Subject to specified exceptions, they agreed to negotiate through the group and not support a transaction unless agreed conditions are met. That does not give the group unilateral control over Sherritt, but it means management and any bidder must take a coordinated creditor position seriously rather than assume the notes can be negotiated holder by holder.
The Cooperation Agreement Has a Built-In Clock
The agreement is not open-ended now. Kyma’s disclosure says it terminates at the earlier of completion of an approved transaction or 180 days after its effective date, unless extended or ended earlier under its terms. That matters because Sherritt’s challenges make delay expensive. A long negotiation can consume cash, complicate lender relations and push restart plans further into the future before any formal insolvency process is considered.
The document also contains an important securities-law distinction. The holders expressly state that they do not intend to act jointly or in concert for securities-law purposes, even while coordinating transaction discussions. The group is organizing around the debt, not declaring itself a single controlling shareholder. The structure resembles creditor groups used in complex restructurings: members pool information and negotiating leverage while preserving separate legal identities. For Sherritt, that creates a disciplined counterparty and potentially narrows the transactions that can gain broad noteholder backing.
Kyma Sits on Both Sides of the Capital Structure
Kyma’s position is influential because it is exposed to Sherritt as both a shareholder and a bondholder. As of September 8, Kyma said it controlled 94,562,842 shares, equal to 13.4% of Sherritt’s outstanding equity. Third parties advised by Kyma held another 8,571,429 shares, taking the combined figure to 14.7%. On the debt side, Kyma controlled $61.9 million principal amount of the 2031 notes, or 24.9% of the outstanding notes.
Including another $15.2 million of notes held by third parties advised by Kyma, that debt exposure rises to about 31.0% of outstanding principal. This position helps explain why the restructuring debate has spilled into corporate governance. Kyma is not merely seeking repayment as a creditor; it also has an equity interest in dilution, board composition and future ownership. That combination can create strong incentives to challenge a transaction that preserves debt value but leaves existing shareholders with a sharply reduced stake.
Sherritt Restructured These Notes Only Last Year
The current fight is more striking because Sherritt already completed a balance-sheet transaction in April 2025. At that time, roughly $221 million of 8.50% senior second-lien notes due 2026 and about $70 million of 10.75% unsecured PIK-option notes due 2029 were exchanged for approximately $266 million of amended 9.25% senior second-lien secured notes due 2031 under a Canada Business Corporations Act plan of arrangement.
A subsequent exchange converted about $17 million of those amended notes into 99 million common shares. Sherritt said the combined transactions reduced principal indebtedness by roughly $42 million, lowered annual interest expense by about $3 million and pushed the maturity of its note obligations to November 2031. The 2031 maturity was designed to create breathing room. The fact that another recapitalization debate emerged again little more than a year later shows how quickly operating shocks and liquidity constraints can overwhelm the benefit of a longer maturity.
Liquidity Pressure Makes the Debate More Than Theoretical
Sherritt’s second-quarter results show why creditors are organizing now rather than waiting for 2031. At June 30, the company reported $80.1 million of available liquidity in Canada and no remaining availability under its credit facility. Loans and borrowings stood at $323.2 million. Sherritt also recorded a $71.1 million net loss from continuing operations for the quarter, although that figure included significant items outside its core metals operations.
The credit facility adds pressure. At June 30, its borrowing base had fallen to $43.1 million while aggregate borrowings, including letters of credit, were $76.3 million. Sherritt later repaid $16.6 million, equal to half of the deficiency, after lenders agreed not to act on the unpaid remainder. As of August 12, the administrative agent had not issued an event-of-default notice beyond the excess-borrowing notices. For bondholders, those figures make liquidity preservation, fresh capital and lender cooperation central to any workable restructuring solution now.
U.S. Cuba Sanctions Triggered the Operating Crisis
The balance-sheet pressure cannot be separated from the change in Sherritt’s operating environment. On May 1, 2026, the U.S. administration issued an executive order expanding sanctions connected to Cuba. Sherritt responded on May 7 by suspending its direct participation in the Moa and Energas joint ventures and repatriating expatriate personnel. The company itself was not designated under the order, but the restrictions materially disrupted how it could participate in those ventures.
The operational consequences arrived very quickly. Fuel and supply disruptions reduced activity at the Moa mine, while mixed-sulphide feed inventory at Sherritt’s Fort Saskatchewan refinery was exhausted. Metals refining stopped on June 22, and mining and processing at Moa ceased near the end of the quarter. Sherritt has said a restart will require new capital and working capital. Any restructuring therefore must solve both financing and sanctions-related operating constraints; fixing only the debt would leave the production problem unresolved.
The Alberta Refinery Raises the Strategic Stakes
Sherritt’s difficulties matter beyond one balance sheet because its Fort Saskatchewan operation occupies a scarce place in North America’s critical-minerals system. The company describes the facility as the continent’s only significant cobalt refinery and one of only three nickel refineries. Ottawa’s critical-minerals list includes both nickel and cobalt, reflecting their importance to batteries, advanced manufacturing, aerospace and other strategic supply chains.
Before the shutdown, the refinery was producing meaningful volumes despite disruption. Sherritt’s share of second-quarter finished production was 1,319 tonnes of nickel and 135 tonnes of cobalt, while sales reached 1,720 tonnes and 167 tonnes respectively. Those volumes were well below the prior-year period, but they show why investors include parties with metals and refining expertise. For employees, suppliers and policymakers, the capital-structure fight is not just about bond recovery. It is also about whether a processing asset can secure the capital and regulatory pathway needed to operate again.
Competing Recapitalization Paths Are Already on the Table
Sherritt has been pursuing a non-binding transaction with Gillon Capital under which a warrant could ultimately give Gillon 55% of the company’s common shares after exercise. The exercise price has not been finalized, and Sherritt said it expected the price to be at a discount to the May 15 share price. On June 15, the parties entered a 120-day exclusivity period for due diligence and definitive negotiations.
A competing consortium including Kyma Capital, Glencore, investor Trifon Natsis and a U.S. anchor investor says it submitted a non-binding recapitalization proposal on June 26. The consortium has described its plan as providing new equity at $0.12 per share, participation rights for eligible shareholders and committed equity funding without a third-party debt-financing condition. Sherritt responded that the proposal was non-binding, conditional and not currently executable. The competing claims underline the central question: which structure can deliver capital, approvals and creditor support fast enough?
The Debt Fight Is Now Entangled With a Boardroom Fight
The restructuring dispute is unfolding alongside a fight over when shareholders should meet and who should oversee the company. Kyma has sought an earlier shareholder meeting and commenced proceedings in the Ontario Superior Court of Justice. On September 4, Kyma said the court had scheduled a hearing for September 25 to consider its application. Sherritt, meanwhile, has set December 15 for a combined annual and requisitioned special meeting unless circumstances change.
That timetable matters because a recapitalization could alter ownership, board influence and the voting power of existing shareholders. Kyma’s shareholding means it has an interest in whether governance changes occur before or after a transaction is negotiated. Sherritt has argued that its selected meeting date reflects, among other things, ongoing transaction discussions and efforts to appoint an auditor. The result is a negotiation involving creditors, equity holders and potential new capital providers, with the court process adding another deadline.
What the Majority Can Do—and What Comes Next
Holding more than half of the notes gives the ad hoc group weight, but not authority to dictate Sherritt’s future. Approvals will depend on the structure, debt documents, corporate law, stock-exchange rules and any regulatory or court process used. A proposal can offer good economics and still fail if it cannot satisfy financing, sanctions, creditor, shareholder or regulatory conditions. Management support alone may not be enough either if major creditors reject the terms.
The next milestones are close together. Kyma’s shareholder-meeting application is scheduled for a September 25 hearing. Sherritt has said the Gillon exclusivity period is expected to expire around October 12, opening room for alternatives if no definitive agreement is reached, while the combined meeting is set for December 15. Investors will be watching for bridge financing, continued lender forbearance, U.S. regulatory clearance and noteholder support. Until those pieces align, organized bondholders remain a major negotiating force today.
