Bloomberg-- Sherritt International Corp., whose executives were once known as Fidel Castro’s favorite capitalists, proposed an out-of-court recovery plan that includes a reduction of 50 per cent in the value of its bonds.

The Canadian miner, which has significant assets in Cuba, is offering to buy back as much as $588 million of its debt at a big discount to face value. Bondholders will get 53 cents on the dollar plus accrued and unpaid interest if they accept by 5 p.m. ET on March 27, or 50 cents plus interest if they wait.

The bondholders would get new second-lien notes with an 8.5 per cent coupon.

While the deal comes with a heavy loss, the board is recommending investors take it because it’s the best available alternative to tackle “its significant historical debt level and liquidity challenges.”

Under the restructuring plan, the company would also exchange about $145 million in debt related to a nickel project in Madagascar in return for equity in the venture or a new loan that would exclude any recourse against Sherritt.

The deal “will improve Sherritt’s capital structure and liquidity and deliver a number of benefits to stakeholders,” Chief Executive Officer David Pathe said in a statement Wednesday. “The transaction treats all three series of Sherritt’s existing notes equally, provides noteholders with security over Sherritt’s material assets, and will put Sherritt in a better position to increase the overall value of its business to be in a position to repay in full the new second lien notes.”

The company’s bonds due 2025 were unchanged at 26.9 cents on the dollar, compared with 67 cents a year ago, while notes due 2023 traded at 30 cents and the ones maturing next year were last quoted at 48 cents.

For more than a decade, Sherritt has fought to reduce its debt, selling all of its coal assets in 2013 as commodity prices languished. A spike in cobalt prices in 2017 helped the company post its first annual profit since 2012 but it fell back into the red the following year. Total debt stands at $736.4 million, according to a filing Wednesday, less than a third of what it was about than two years ago.

Sherritt’s debt almost quadrupled between 2007 and 2008 as the company developed the massive Ambatovy nickel and cobalt project in Madagascar with Sumitomo Corp. and Korea Resources Corp. From the start, the project was plagued with delays and cost overruns, not to mention a political coup that resulted in the suspension of mining licenses.

Meanwhile, a tightening of U.S. sanctions against Cuba has resulted in the island nation being unable to pay Sherritt for the energy it produces in foreign currency. Sherritt said its Cuban partners have committed to increasing its US$2.5 million monthly payments to the miner.

The Toronto-based miner plans envisions a reduction of debt by $414 million, cutting annual cash interest payments by about $19 million, it said in the statement.

The out-of-court restructuring is being proposed under the Canada Business Corporations Acts. Sherritt’s advisers are Goodmans LLP and National Bank of Canada, with Paradigm Capital Inc. retained by the board to provide a fairness opinion on the transaction, according to the statement.