Cargill Said to Back Creditor Chasing Stake in Massive Soy Plant

Cargill Inc. is in advanced talks to back a hostile creditor’s bid to take over a distressed Argentine soy exporter, according to people familiar with the matter.

The agriculture trading giant would partner with Grassi SA to charter crop shipments if the local brokerage house is successful in its bid to gain control of the assets of Vicentin SAIC, according to the people, who asked not to be identified because the information is private.

Cargill confirmed it is in discussions to explore a potential commercial-only agreement, but said the talks are preliminary.

Vicentin was once a crown jewel in Argentina’s soy-crush industry before it filed for bankruptcy protection five years ago. The assets include a 33% stake in the world’s biggest soy plant, in the locality of Timbues on the Parana River, which can process more than 30,000 metric tons a day of beans.

That stake and other assets are up for grabs in a legal process that will decide the fate of Vicentin. Grassi and global trading rivals in a few days will be able to lodge their offers to creditors in a cramdown to restructure $1.3 billion of unsecured debt and outline plans to take over Vicentin, with a view to rekindling its vast export operations.

The shortlist of suitors also includes Bunge Global SA, which already owns 67% of the Timbues soy plant; and Louis Dreyfus Co. in a partnership with local trader Molinos Agro SA, which is majority-owned by the Perez Companc billionaire dynasty and was once a partner in Timbues before exiting a decade ago.

Louis Dreyfus declined to comment, while a Molinos spokesman said the company is working to bring a proposal to the table. Bunge didn’t immediately respond to a request for comment.

Grassi may hold an advantage because it forced the case to a cramdown, foiling an attempt by the family group that owns Vicentin to exit bankruptcy protection in a rescue led by Bunge. Judges agreed with Grassi that the rescue was unconstitutional, and opened the case to competing proposals. Vicentin has lodged an appeal in the federal supreme court.

Bloomberg News also reported last year that Grassi has held talks with Cima Investments SA, which acquired almost 35% of Vicentin’s unsecured debt from a group of global banks, giving it the power to veto any new deal.

Cargill won’t be involved in the cramdown directly but would join Grassi later as a commercial partner, the people said.

For Vicentin’s creditors, including hundreds of farmers and grain silos across Argentina’s Pampas farming belt, the cramdown promises to be the final stretch of an arduous path that even featured a fleeting nationalization plan.

In the cramdown, the winner must reach two key thresholds by roughly the end of October: More than half the number of creditors holding at least two thirds of the value of the debt are required to agree to a proposal before it can be sent up to a bankruptcy judge for rubber-stamping.

In addition to the Timbues plant, Vicentin’s other assets include another soy terminal and a coveted sunflower-crush plant. Currently, Bunge uses all of the Timbues crush capacity, and Vicentin’s other assets stay operative through tolling arrangements.

Tags: Cargill, soybean, Argentina