Argentina’s Banco Nacion Will Fight Vicentin Debt Restructuring

(Bloomberg) -- Argentina’s biggest bank plans to oppose any attempt by Vicentin SAIC to restructure its $900 million of debt, saying the agricultural company must sell assets to pay down its obligations before seeking relief, according to people familiar with the matter.

Officials installed at state-owned Banco de la Nacion by new President Alberto Fernandez have told Vicentin it needs to raise the cash now. They’re also investigating a loan made to the company for irregularities, the people said, asking not to be identified discussing the private matter.

The hard-line stance toward one of the country’s biggest soybean exporters is in line with pledges from the leftist government that took over last month to take a less forgiving approach with businesses. Fernandez has vowed to prioritize the needs of everyday citizens and eliminate the privileges that he says often accompanied back-door deals that favored large corporations and the wealthy.

Banco Nacion’s viewpoint is key because it’s the largest creditor for Vicentin, which last month missed a $350 million payment to farmers amid an economic crisis in the agriculture-dependent country. Banco Nacion, then under the control of the former government, extended a credit line to cover the shortfall, according to the people familiar with the matter.

More Money

In addition, Vicentin got a $300 million unsecured loan from Banco Nacion during the previous administration that was approved by the board but didn’t go through the bank’s lending department, according to the people. Officials are now investigating the circumstances of that loan, the people said.

Former Chairman Javier Gonzalez Fraga didn’t immediately reply to requests for comment. Banco Nacion’s press department declined to comment. Vicentin’s external public relations firm in Argentina declined to comment on behalf of the company.

Eduardo Hecker and Matias Tombolini, appointed by President Alberto Fernandez as the chairman and vice chairman of the bank, have ordered board members not to give any more unsecured loans without the approval of bank executives, according to the people familiar with the matter.

Hecker has met with at least one of Vicentin’s shareholders, Alberto Padoan, to tell him that the company would need to sell assets to pay debts.

Padoan said it wasn’t possible because the prices being offered right now are too low, the people said.

Hiring Advisers

While Vicentin hasn’t stated publicly that it intends to restructure its debt, it has sent notes to the grain exchange in Rosario saying it’s working to find a solution to its financial stress. The agriculture firm hired Roberto Helbling, former head of Barclays Plc’s Argentine unit, as a financial adviser ahead of any debt talks, people close to the company said. The company also hired the firm Estudio Alegria, Buey Fernandez, Fissore y Montemerlo as legal advisers along with DLA Piper, those people said.

Estudio Alegria didn’t immediately reply to efforts to seek comment. Helbling and DLA Piper declined to comment.

Vicentin raised some cash last month by selling a 16.7% stake in Renova, owner of Argentina’s biggest soybean-crushing plant, to its partner Glencore Plc, the world’s largest commodity trader, for an undisclosed price. Baar, Switzerland-based Glencore now has 66.7% of Renova with Vicentin holding the rest.

Apart from its stake in Renova, Vicentin owns a cotton unit, a port with the capacity to load 270 barges a year, a grape juice maker, a feedlot with 20,000 heads of cattle, a vineyard and a soybean, corn and sunflower cooking oil producer.

Based in Santa Fe province, it is the biggest shipper of soybean meal and oil from Argentina, which is the world’s top exporter of the products used for animal feed and cooking.

Vicentin, which last year shipped out 5.3 million metric tons of soy meal and oil, according to public records, hasn’t yet filed any formal request to protect its assets at court, according to the external spokesman who handles the company’s press.

--With assistance from Carolina Millan, Scott Squires and Jonathan Gilbert.

To contact the reporter on this story: Pablo Gonzalez in Sao Paulo at pgonzalez49@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Brendan Walsh

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