PGA Golf Course Becomes Collateral in $1.2 Billion Restructuring

(Bloomberg) -- A top Latin American golf club is being offered as part of about $600 million in collateral to lenders as the corporate titan Aldo Navilli, owner of Argentine food producer Molino Canuelas SACIFIA, gets closer to restructuring $1.2 billion of debt, according to people familiar with the matter.

Navilli, who had stridently resisted putting his Canuelas Golf Club in hock during more than a year of negotiations with creditors including ING and Rabobank, reversed course in recent days to get the deal done, the people said. The Canuelas Golf Club covers 178 acres (72 hectares) of grassland on the outskirts of Buenos Aires, and hosts a Latin American PGA Tour stop.

The golf assets are valued at $29.1 million, according to documents obtained by Bloomberg News. The company is also pledging among other assets a port in Las Palmas valued at $95.3 million, a real estate project in Rosario worth $20 million and three farms in Argentina’s northwest valued at $53.9 million, according to a memo the company sent creditors earlier this month.

Specific details of the restructuring are still being worked out, but the assets given as collateral have been agreed upon, one of the people said. Lenders are taking a 60% haircut on the net present value of what they’re owed, two of the people said.

Navilli declined to comment on the recent negotiations. A company spokeswoman said Canuelas is operating normally as it works with creditors. She declined to comment on specific terms. Representative for ING and Rabobank didn’t reply to emails seeking comment.

Canuelas fell behind on loans beginning in 2016 when Argentina’s peso plummeted and the economy contracted as policy makers raised interest rates and pared fiscal spending in an effort to subdue double-digit inflation. Canuelas, like many Argentine companies crippled by the currency crisis, owes debts in dollars but accumulates revenue mostly in pesos.

The restructuring is based on the assumption the company will bring in $115.4 million of annual free cash flow, according to the documents seen by Bloomberg. Navilli will contribute $90 million to the food producer, $35 million next year and $55 million in 2021.

He is also promising to raise cash by selling 70% of the company’s total equity by 2023, and eventually liquidating the assets he has offered as collateral. If all the sales happen, creditors may collect about $683 million. The company will start paying interest in 2020, but may not pay back any principal until as late as 2027.

Buenos Aires-based Canuelas sells food and industrial products as well as agribusiness services such as grain storage. Its flagship product is the 9 de Oro line of cookies and crackers, which Argentines typically pair with mate, a tea-like beverage.

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

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

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