Banks shun Tereos attempt to secure wider funding
April 21 2019 11:45 PM
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A crane loads sugar beets in a field for transport to a nearby Tereos processing plant in Picardie, northern France. Tereos, the world’s second-biggest sugar producer, has struggled to cope with poor market conditions since the European Union’s output quota regime ended in 2017, warning that it would post a loss for a second year in a row this season.

Reuters /Paris

An attempt by French sugar group Tereos to spread risk on a €250mn ($281mn) loan secured earlier this year has failed to attract bidders, leaving three main creditor banks with exposure, sources familiar with the matter said.
Tereos, the world’s second-biggest sugar producer, has struggled to cope with poor market conditions since the European Union’s output quota regime ended in 2017, warning that it would post a loss for a second year in a row this season.
The debt-laden cooperative group said in February it had subscribed a €250mn ($281mn) loan with BNP Paribas, Natixis and Rabobank, to reimburse half of its 2020 bond one year in advance.
Tereos then launched a syndication round with about 10 banks, including other members of its banking pool and new ones, in a bid to spread the risk, the sources said. The call, for €50mn, failed to attract any bidders by April 15, they said.
“The group is in constant dialogue with its financial partners on various financing operations around the world.
The group does not comment on these non-public discussions which, taken in isolation, may give a misleading picture of the group’s funding,” Tereos said in an e-mail statement.
Potential bidders were put off by tough conditions for European sugar producers faced with a collapse in prices but also by the company’s high debt level and poor results expected this year, one source said.
“The problem here was significant risk. The pricing offered failed to attract banks,” one source said. “This means they will have to pay more and go elsewhere.”
The departure of the group’s chief financial officer, Olivier Casanova, responsible for presenting the syndication offer, discouraged potential participants, the source said.
Natixis and BNP declined to comment.
Rabobank was not immediately available to comment.
Tereos held net debt of €2.7bn by December 31, up 4.5% on the year, putting the net debt to adjusted EBITDA ratio at 8.0 versus 4.1 a year earlier.
Concerns about Tereos’ financial health in a difficult sugar market sent yields on the group’s bonds to all time highs late last year and they have remained high since with Tereos’ June 2023 bond yielding 8.5% on Thursday.
The sugar maker said in February it maintained at group level a financial security of 1bn euros as of December 31, 2018, including a still undrawn €225mn back-up facility, despite plunging profits.
A surge in output after the European Union abolished production quotas and a 40% slump in prices since early 2017 in an oversupplied world market has hit profits for several European firms.
Suedzucker, Europe’s largest sugar refiner, said in February it would halt sugar output at two factories of its French branch Saint Louis Sucre while French competitor Cristal Union is planning to shut another two.
Tereos has said that the group does not expect to close any plants in France.
The group is looking at opening its business to partners to boost diversification and internationalisation.
The process could take two or three years, it said.



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