Mexican president could be 'misinformed' about troubled steelmaker Ahmsa

Mexican steelmaker Altos Hornos de México (Ahmsa) warned that President Andrés Manuel López Obrador (AMLO) may be misinformed about the company's situation despite the fact that it has sent him statements to keep him up to date.

The firm made the comment after AMLO said on Monday that his government has not been able to help bail out the steel company because businessman Alonso Ancira would continue to head the firm. The government previously said it would seek to attract investors to help Ahmsa pay its debts with state bodies if Ancira sold his shares. 

"We have been looking for a way to bail out Altos Hornos ... but [Ancira] isn't yielding. I believe he would like to continue being dominant, but that's not possible because there's no one willing to associate with them when it's been shown that the management of the company wasn't good," AMLO said in his daily news conference. 

"Upon careful consideration, regarding what was stated by the president, it should be noted that he may be misinformed and unaware of the letter containing specific details that was sent to him on August 1," Ahmsa said in a statement sent to BNamericas.

"Or the intentions are different from what the president states, since all necessary information has been provided to facilitate federal support for the new investors involved in the reactivation of Altos Hornos de México," the company added through spokesperson Francisco Orduña.

Orduña said that, in response to a letter dated July 26 and signed by Félix Medina Padilla, a federal prosecutor commissioned by finance minister Rogelio Ramírez de la O to handle the Ahmsa issue, on August 1 the company sent a letter to AMLO outlining the agreements signed by Argentem Creek Partners, as well as the terms for payment of its debts with public bodies.

He added that the letter also states that the interest of the parties should be in line with that established in the event of a commercial bankruptcy, to achieve the recovery of the company, which would be ensured through the agreement with the investors led by Argentem.

The government has also been told directly that "neither Alonso Ancira nor the members of his family will have any interest in the future of the company, by virtue of the assignment of shares and the resignations approved in company meetings."

AMLO said he thought that Ancira may be waiting for the government term to end (in September 2024) so that his debt can be condoned.

“He [Ancira] has to understand that his cycle is over and in this way we are helping to restructure the debt that is owed to the public treasury. We can’t condone the debt,” AMLO said.

The Coahuila-based steelmaker, one of Mexico’s biggest, has been suffering financial and labor problems since last year that have forced it to gradually stop production since last November.

In April, the company, which is controlled by Grupo Acerero del Norte (GAN) and has been in bankruptcy proceedings since January, agreed to be absorbed by US asset manager Argentem Creek Partners.

But the new owners have been unable to make the agreed capital injection or take control because they are waiting for the government to approve the financial restructuring plan, according to Ahmsa.

Frozen funds

According to Ahmsa, the communication sent to the president also states that "the non-release of accounts by the financial intelligence unit constitutes an obstacle for the investors to put in the necessary funds for the resumption of the company's operations," and for the steelmaker to meet its obligations.

Orduña underscored that, as previously indicated, US$150mn contributed by the investment fund of the Kickapoo tribe has already been credited and other interested parties are also available to invest.

In addition to requesting an agreement on the repayment of debts to public entities, in the letter sent on August 1 Ahmsa also requested the postponement of the last payment outlined in a prior repayment agreement with federal oil company Pemex in order to "avoid significantly affecting the initial cashflows for the reactivation of Ahmsa's operations.”

Orduña added that Ahmsa also informed the president that the representatives of Argentem, as well as Cargill and Afirme, the main creditors, expect to meet with federal government officials designated by AMLO "to confirm their support for the aforementioned restructuring and count on their supervision for its implementation.”

The company said that if it did not have the active support of tax authority SAT, Pemex, public power utility CFE and other government entities, "it will not be possible to successfully conclude the financial restructuring of Ahmsa."