(Bloomberg) -- Louis Dreyfus Holding BV, the parent company of the agricultural-trading giant, saw its equity decline again last year as it continued to pay high dividends despite losing money.
The group’s finances are increasingly in focus as billionaire owner Margarita Louis-Dreyfus tries to sell a stake after borrowing at least $1 billion to fund a buy-out of other family members. She’s been said to have struggled to do so due to her reluctance to give up control and lukewarm interest from investors.
LDH, the holding company for trader Louis Dreyfus Co. and Brazilian sugar group Biosev SA, reported a net loss of $52 million last year, according to its annual report filed with Dutch regulators. It also paid a $280 million dividend.
That reduced LDH’s equity to $3.8 billion at the end of 2019, from $4.1 billion a year earlier. The company proposed a further $223 million dividend this year to be paid “from the retained earnings,” according to the report.
A spokesperson for LDC declined to comment.
The trading house, the ‘D’ in the quartet of powerhouse agricultural merchants known as the ‘ABCDs,’ has been struggling with low profitability in recent years because of a global trade war, oversupplied markets and the fallout from African swine fever outbreaks. LDH’s proposed dividend for this year represents almost all of the $230 million net income reported by LDC for 2019.
Among LDC’s headaches is an investment in Luckin Coffee Inc., the Chinese chain embroiled in a scandal over faked transactions. LDH’s annual report showed that the trading house “partially reduced” its shareholding in Luckin between January and March this year -- before the coffee company first announced an internal investigation into its accounting that sent the shares plunging. The spokesperson declined to say how many Luckin shares were sold.
Russian-born Louis-Dreyfus, who owns about 96% of LDH, has been squeezing the group for cash as she makes good on a commitment to buy the shares of other family members. Over the past five years, the equity of the group has fallen by more than a third.
Louis-Dreyfus pledged her controlling stake in LDH to Credit Suisse Group AG to secure a $1 billion loan in early 2019. LDH’s annual report showed that around the same time, LDH made a $50 million loan to Akira BV, the main holding company for Louis-Dreyfus’s shares in the group.
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