Nyrstar was on the brink of bankruptcy before Trafigura stepped in LONDON: Minority shareholders in zinc producer Nyrstar are seeking 1.48 billion euros ($1.63 billion) in damages from global commodities trader Trafigura over the restructuring of the Belgian firm, the shareholders" lawyer said on Saturday. Nyrstar was on the brink of bankruptcy before Trafigura stepped in. The Geneva-based trader has a 24.4% stake in the Belgium-listed firm. The statement outlines for the first time the total damages sought by the minority shareholders and marks an escalation in the fight for Nyrstar after several months of legal action. "We have publicly launched the suit and the formal filing will be put to the Brussels commercial court just after the shareholders general meeting on Nov. 5," said Laurent Arnauts of Watt Legal lawfirm, representing about 100 shareholders. As part of the deal to save Nyrstar, lenders had to write off part of their debt or agree to extended repayment schemes while all the firm"s operating assets were transferred into a new subsidiary called Newco 2 based in Britain, in which Trafigura holds a 98% stake. The remaining shareholders were then left with a 2% stake in the operating assets held by Newco 2 through their firm called Nyrstar NV. Nyrstar is one of the world"s largest zinc smelting companies with plants across Northern Europe, the United States and Australia. It also has zinc mines in North America. The shareholders allege that Nyrstar"s board did not pursue profit, acting against its legal duties, and committed fraud. "On the basis ... of fraudulent avoidance of the law provisions regarding liquidation of companies, which require a decision of the general meeting of shareholders," according to a statement from Watt Legal. As part of the lawsuit, the shareholders will seek to nullify the decisions of Nyrstar"s board that accepted the "lock-up agreement," or restructuring terms, in April. A spokesman for Nyrstar said, “Nyrstar NV notes that it has not been served with any legal claim and considers the allegations made via the media...to be without basis. In the event that any such legal claim is made, Nyrstar will strongly defend itself.” He added that without the recent restructuring, group wide insolvencies would have likely occurred and “recoveries for creditors would have receive significantly less and recoveries for shareholders would have been nil.” As an alternative to cancelling the deal, the shareholders are seeking 980 million euros ($1.08 billion) in compensation from Trafigura. Nyrstar NV said on Friday it had received an unsolicited offer from Trafigura to buy the 2% stake for 22 million euros ($24.29 million). Alongside the allegation of fraud, the shareholders allege that Geneva-based Trafigura abused its position as the single largest shareholder since 2015 and will seek 500 million euros ($552 million) in damages. "On the basis of the abuse of the control (majority) by Trafigura ... resulting in severely unbalanced contracts and expensive overfinancing by which Trafigura gained pledges on Nyrstar assets," the lawyer"s statement said. Earlier this week, Belgium"s Financial Services and Markets Authority said it had opened a formal investigation into Nyrstar without providing details. The shareholders will also seek damages for communication deficiencies. In an Oct. 8 statement, Trafigura said its contracts with Nyrstar were market based and not the cause of Nyrstar"s financial troubles. “Trafigura notes recent press comment regarding a lawsuit against it by minority shareholders of Nyrstar NV. Trafigura has in fact not been served with any legal claim, considers the allegations made via the press to be wholly without merit and will vigorously defend against any legal claim if made," the company said on Saturday.