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ECONOMY | 18-07-2020 09:45

Vicentin, Santa Fe government agrees to find ‘consensual solution’ to crisis

Officials mulling over a mixed state-private model for soy giant, according to reports, as provincial government proposes triumvirate of leaders to manage firm through bankruptcy proceedings.

Officials from the bankrupt agro-giant Vicentin and the Santa Fe provincial governments have agreed to work together to find a “consensual solution” to get the troubled firm back on track. 

At a “bankruptcy hearing called by a civil and commercial judge in Reconquista, which sources said was “positive and cordial” both parties put forward ideas to find a way out of the crisis, with the provincial government proposing a trio of trustees to replace current directors, which would include two appointed by the national government plus one provincial official.  These would run the company during bankruptcy proceedings, until there is an acquisition that incorporates a new administration.

A new meeting was scheduled for July 30, with both sides agreeing they would work together to help the firm out of crisis, which is exacerbated by both the coronavirus pandemic.

Bloomberg also reported this week that the provincial government has been floating a proposal that would see Vicentin owned jointly by the federal government and private partners, including local farm companies that are owed money by the bankrupt soy exporter.

Provincial officials have been discussing the proposal with federal authorities and are believed to have proposed it during Wednesday’s mediation meeting before the bankruptcy judge.

Santa Fe Governor Omar Perroti, a political ally of the federal government, and the regional government are in charge of intervention efforts. President Alberto Fernández’s plan to advance on an outright federal nationalisation of the firm met with strong resistance in the region, where Vicentin is based. 

Under the provincial government’s proposal, which could change, the federal government and private sector companies would put up money to pay off Vicentin's US$1.4-billion debt and then divide up its holdings, a source who asked not to be identified told Bloomberg this week.

The government’s participation would be via YPF Agro, a branch of the state-run energy giant. Details on capital or the other potential companies involved were not not given. 

The local agricultural industry could also own a percentage through cooperatives and grain trading houses and elevators to which Vicentin owes 25.7 billion pesos (US$360 million). The proposal would have a provision for these providers to exchange their debts, for which the company defaulted on payments in December, for shares.

A spokesman for the firm said the current owners had already put a debt-for-equity swap on the table and that it should be up to them, not the provincial or federal governments, to decide the company's future in the bankruptcy process.

Some international creditors have also asked a New York judge to subpoena documents from Vicentin, alleging they may have been the victim of a strategy to divert US$400 million to other related companies. The company denies the allegation. 

Cooling

President Fernández said this week that his initial June 8 announcement that the government would seize control of Vicentin and push through a bill to expropriate the bill in Congress was not well-received.

Speaking to La Patriada radio station, the Peronsit leader indicated he had cooled off on the idea and that he had perhaps made a mistake.

Argentina is the world's largest supplier of soybean for animal feed and soybean oil for cooking and biofuels. In recent years, Vicentin has been in strong competition with multinationals Bunge Ltd and Cargill Inc, as well as its local rival, Aceitera General Deheza SA, to become Argentina’s main exporter of soy products.

Vicentin, which has a joint venture with Glencore Plc, has not registered any export of crops since December 9, days after defaulting on payments to suppliers worth US$360 million, according to data from the Agriculture, Fisheries and Livestock Ministry.

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