Sherritt Boxed In as Activist Kyma Capital Unites Creditors for Overhaul

LONDON and TORONTO – September 08, 2026 – The battle for the future of Sherritt International Corporation has entered a decisive new phase. London-based Kyma Capital has orchestrated a powerful coalition of the Canadian mining company’s creditors, creating a united front that now controls the fate of any potential rescue or restructuring plan. The move signals a dramatic escalation by the activist investor to force a strategic overhaul at the financially distressed nickel and cobalt producer.

In a formal disclosure today, Kyma Capital announced it has entered into a Cooperation Agreement with other key bondholders. Together, this newly formed “ad hoc noteholder group” beneficially owns more than 50% of Sherritt’s 9.25% senior second lien secured notes due 2031. This majority position gives the group immense leverage, effectively allowing them to approve or veto any major financial transaction, from a recapitalization to an outright sale of the company. The agreement binds the holders to negotiate collectively for the next 180 days, preventing Sherritt’s management from cutting separate deals and concentrating power squarely in the hands of this new creditor bloc.

A Multi-Pronged Assault

This maneuver is the latest and most formidable move in a multi-pronged campaign by Kyma to exert influence over Sherritt. The activist firm is not merely a creditor; it also holds a significant equity position. Between its own fund and third parties it advises, Kyma controls 14.7% of Sherritt’s common shares, making it a powerful voice in both the boardroom and the bond market. This dual-class ownership is a hallmark of sophisticated activist strategy, allowing the fund to apply pressure from every angle.

Kyma’s campaign has been building for months. On June 26, a consortium including Kyma submitted a non-binding recapitalization proposal to Sherritt’s board, signaling its intent to lead a financial restructuring. Unsatisfied with the board’s response, Kyma has also taken the aggressive step of commencing a court application to requisition a special meeting of shareholders. The stated goal: to force changes to Sherritt’s board of directors and install individuals more aligned with its vision for the company.

“Kyma holds the Common Shares and Notes for investment purposes,” the firm stated in its press release, while reserving the right to “participate in or propose transactions involving Sherritt” and “engage with the board of directors, management and other stakeholders.” This carefully worded statement belies the aggressive reality: Kyma is positioning itself to dictate the terms of Sherritt’s survival.

A Company on the Brink

Kyma’s activism is not occurring in a vacuum. Sherritt International has been teetering on the edge, a situation laid bare in its recent financial reports. The company has warned of “material uncertainty” regarding its ability to continue as a “going concern,” operating with severely constrained liquidity that stood at just $80.1 million as of June 30, 2026, with no availability under its credit facility.

The primary catalyst for this crisis was geopolitical. Expanded U.S. sanctions against Cuba, effective May 1, 2026, delivered a devastating blow to Sherritt’s core operations. The company was forced to suspend its participation in the Moa nickel and cobalt joint venture in Cuba, its flagship asset. The knock-on effect was swift: by late June, its refinery in Alberta, Canada—one of North America’s only cobalt refineries—had run out of Cuban feed and ceased operations. Restarting these critical assets requires a significant injection of new capital that Sherritt simply does not have.

The operational crisis triggered a cascade of corporate turmoil. The company failed to file its Q1 2026 financials on time, resulting in a temporary cease trade order from Canadian regulators. The period also saw the resignation of its Chief Financial Officer and its external auditor, Deloitte LLP, compounding the sense of a company in disarray.

The Battle for Recapitalization

The formation of the noteholder group directly challenges another potential lifeline for Sherritt. The company had previously struck a preliminary agreement to sell a controlling stake to Gillon Capital, a Texas-based family office. However, the Kyma-led creditor group has made it clear it does not view the Gillon deal as the only path forward. According to sources familiar with the matter, the noteholders have presented an alternative recapitalization proposal and an emergency financing term sheet to Sherritt’s management, believing their plan offers superior value and a more executable strategy.

Sherritt is now caught in a strategic vise. It desperately needs a financial partner to fund the restart of its operations and secure its future as a key player in the critical minerals supply chain. But its most powerful creditors have now organized to ensure that any path forward aligns with their interests. The next 180 days will determine whether Sherritt’s current management can negotiate a consensual plan or if the Kyma-led group will force a more radical transformation.

The Rise of the Creditor Activist

The standoff at Sherritt International is a textbook example of an evolving and increasingly potent form of market influence: creditor activism. Historically, activist investors focused on accumulating equity to win board seats and influence strategy through shareholder votes. Today, sophisticated funds like Kyma are leveraging the power of debt to drive change, particularly in distressed companies.

By acquiring a controlling stake in a company’s debt, often at a discount on the open market, an activist gains a seat at the negotiating table with legal rights that can be superior to those of shareholders. In a restructuring, debt holders are paid before equity holders, giving them immense sway over the outcome. Forming an ad hoc group, as Kyma has done, formalizes this power, creating a monolithic bloc that management cannot ignore or circumvent.

For Sherritt, the implications are profound. The company’s future is no longer solely in the hands of its management or its shareholders. It is now subject to the collective will of a majority of its senior noteholders, a group with a clear leader, a competing plan, and the leverage to see it through. The signal in this noise is unmistakable: in the high-stakes world of corporate turnarounds, the power is shifting from the boardroom to the bondholders.