French sugar group Tereos, which has been hit by a slump in the sugar market, said on Monday it had secured a loan that would give the co-operative a financial reprieve as it hopes for a rebound in prices.
In December, Tereos - which last season became the world's second largest sugar maker - plunged to a first-half loss of almost €100 million ($113 million) and said it expected to be in the red across its full financial year for the second year running.
Raw sugar futures ended 2018 at their lowest in 10 years, pressured by heavy global oversupply.
Guaranteed Minimum Prices
The European Union liberalised its sugar market in September 2017, ending a system of guaranteed minimum prices and protected production quotas.
This gave producers more freedom to expand and export, but a worst-case scenario emerged, with EU makers exposed to the slump world prices.
Tereos said it had secured a €250 million loan expiring in 2022, and would repay half of its €500 million March 2020 bond a year in advance.
The loan is being provided by BNP Paribas, Natixis and Rabobank, Tereos said in a statement.
"This allows us to gain time to see how things evolve on the sugar market," a Tereos spokesman said.
'Responsible Management'
"In such a violent sugar crisis it is responsible management. We cut by half the reimbursement we would need to have done next year."
Tereos said the new loan would have a slightly lower interest rate than the 4.25 percent committed in the bond expiring in 2020 but declined to disclose it.
The company unveiled plans last summer to open its business to investors as it seeks to expand, a move it has since said could happen in around 2-3 years.
Internal Crisis
But it has also been facing an internal crisis with dissidents accusing Tereos of hiding financial difficulties, something the cooperative group has always denied.
Tereos said it maintained at group level a financial security of €1 billion as of 31 December 2018, including a still undrawn €225 million back-up facility.
Rival Südzucker said last month it planned to cut capacity and close sugar production plants to save about €100 million a year following the slump in sugar prices.
That plan includes two sugar facilities in France at its branch Saint Louis Sucre.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
