Distressed fund wins key role in bankruptcy case of Argentina soy exporter Vicentin

A former Wall Street trader turned distressed-asset investor has become a major player in the bankruptcy case of Vicentin SAIC, a company that was once the crown jewel of Argentina’s huge soy industry. 

Esteban Nofal, an Argentine who runs Cima Investments SA, has swept up almost 35 percent of Vicentin’s US$1.3 billion of unsecured debt from a group of global banks for just 11 cents on the dollar. He stands to reap an impressive gain from the investment if a takeover plan led by Bunge Global SA is approved. And if it falls through, Cima is in a position to determine Vicentin’s fate.

“I saw an opportunity where you could enter the transaction and have very few instances where you’d lose money,” Nofal said in a phone interview.

Vicentin was built up over decades by a family dynasty that took on the might of global commodity trading houses such as Cargill Inc and Louis Dreyfus Co. That all unravelled in 2019 as Vicentin left itself exposed to a currency run. It defaulted on its debt and plunged into bankruptcy protection — upending the crop-dealing industry in South America’s oldest grains exporter.

A rescue plan came in the form of a severe debt restructuring and takeover spearheaded by Bunge and Glencore-backed Viterra Inc, which are completing a merger. Under that plan, Nofal would almost double the US$50 million he raised for the acquisition. That’s because Vicentin would pay about 10 cents of the dollar straight away and another 10 cents a year later. There’s also a provision down the line for 10 cents more.

However, the Bunge-led deal is at risk after a hostile creditor group led by brokerage house Grassi alleged that it was unconstitutional. A high court took on the complaint in October and must now rule. Should judges agree with Grassi, the case would likely get pushed open into a so-called cramdown where competing proposals could be lodged.

In that scenario, Cima would control the future of Vicentin, because any new rescue bid would require sign-off from creditors holding at least two thirds of the unsecured debt. With Cima now owning a little more than one third, it has, in essence, veto powers.

“If the current deal gets ratified, you get 20 cents,” Nofal said. “If it doesn’t, we want to sit down with every party that’s been litigating for five years and say, ‘OK guys, let’s fix this.’” He said he is open to having an equity stake in the new Vicentin.

Nofal, 58, began his career at Oppenheimer in New York before turning to distressed investing in emerging markets like Venezuela and Russia. Back in Argentina, renowned for its boom and bust cycles, he co-founded Cima, Spanish for summit, in 1998.

The Vicentin case has broad significance for global soy trading because Argentina is the largest supplier of processed meal and oil — and up for grabs is Vicentin’s stake in Renova SA, its venture with Viterra that operates one of the world’s biggest crushing plants.

It’s unclear in a cramdown whether Bunge-Viterra would revive a proposal. Grassi, meanwhile, is preparing a bid and has held talks with Cima.

Vicentin in a December 17 statement urged the high court to greenlight the current deal. It said it was running out of cash flow to survive and doesn’t have the resources to finance itself through a cramdown.

Construction of Renova’s main plant was funded by some of the banks that have sold their debt, totalling US$447 million, to Cima. They include International Finance Corp, the private-lending arm of the World Bank, Dutch-based outfits including FMO and Rabobank, and other lenders in France and Japan. Nofal started negotiations with the banks more than two years ago. 

“Argentina is the king of opportunities. There’s big value here,” he said. “I think Vicentin, if you turn it on again, is a US$1-billion plus company any day of the week.”