Ceagro Agricola secures 30 day standstill agreement
by Maria Fernanda Blase
Ceagro Agricola, the Brazilian trading company in default, has secured a 30-day standstill agreement with bank lenders after weeks of negotiations, lawyer Pedro Henrique Bianchi, who is representing the company, said in a phone interview Thursday.
The stay-of-execution will be enforced as of today, said Bianchi. The company is also meeting with the bond’s trustee Bank of New York on 24 August to kick-start restructuring talks, he added.
All banks have signed the standstill agreement, which will expire on 13 September, Bianchi said. Banco Itau, Santander, Credit Suisse, BTG Pactual, ABN Amro, HSBC, Banco do Brasil, Bank of China, Banco Indusval and Banco Votorantim are lenders of the company. The banks are exposed to Ceagro via trade facilities known locally as ACCs, which are not restructured under bankruptcy court-supervision, as reported. Some of Ceagro’s creditors have already filed lawsuits to secure repayment, but those proceedings should be temporarily suspended once the standstill is implemented, as reported.
Banks and bondholders will have different restructuring offers, said Bianchi. The restructuring offer will entail an extension of maturities and a haircut, as reported. Bank lenders were offered a nine-year repayment schedule, which will now begin to be debated, said a source familiar. Terms and conditions to restructure Ceagro’s USD 100m 10.75% senior secured bonds due 2016 have not yet been negotiated, Bianchi said.
As part of its restructuring efforts, Ceagro is also attempting to raise fresh loans and is negotiating with some of its creditors, mainly BTG Pactual and Indusval, and new investors, as reported. Those investors are interested in the new financing, said another source involved. The company needs around USD 200m to operate at full capacity, as reported.
Creditors who provide new money will be offered improved restructuring conditions. Investors will be afforded a chattel mortgage security over receivables as part of the collateral package to be assigned to the new loan, as reported.
As of December 2014, Ceagro had BRL 8bn (USD 2.27bn at today’s exchange rate) in gross debt to be restructured, as reported. While the auditor has signed the company’s 2014 financial statements with a qualified opinion, some write-offs are still expected, especially related to the receivables account, one of the sources said.
Boucinhas, Campos & Conti Auditores Independentes, the long-time auditor of the company, mentioned adjustments and write-offs in account receivables, a revaluation of Ceagro’s real estate and deferred taxes that were the basis for the qualified opinion, as reported. In the fiscal year ended 31 December, 2014, Ceagro reported a BRL 413.5m (USD 117.8m) operational loss before taxes and BRL 108m (USD 30.5m) in derivative losses, as reported. The company consumed BRL 140m (USD 40m) in cash last year.
KPMG and Felsberg Advogados are acting as financial and legal advisers to the company, respectively.
Ceagro is based in Campinas, the state of Sao Paulo, and originates and sells soybeans and corn through a business model based on the barter system. Ceagro provides fertilizers and pesticides to local producers in exchange for their production. The transaction is undertaken via a receivable called Cedula de Produto Rural (CPR).