A top court in Argentina is set to decide whether crop giants Bunge Global SA and Viterra Inc will be allowed to take over a company that was once the crown jewel of the country’s massive soybean-processing industry.
The ruling on Vicentin SAIC is expected as soon as this month and has broad significance for global soy trading, since Argentina is the largest supplier of processed meal and oil. A go-ahead for a plan to rescue Vicentin, which filed for bankruptcy protection nearly five years ago, would further solidify Bunge-Viterra’s share of world soy-crush capacity.
Meanwhile, a rejection would throw open an opportunity for competing proposals.
Vicentin was a rare success story in crisis-strewn Argentina, built up over decades by the Vicentin family dynasty that took on the might of commodity trading houses like Cargill Inc. and Louis Dreyfus Co. That all unraveled in 2019 as the company defaulted on some US$1.5 billion of debt and entered bankruptcy proceedings — upending the crop-dealing industry in South America’s oldest grains exporter.
Vicentin family directors sought to keep the company alive, winning creditor approval for a rescue featuring a takeover of its assets led by Bunge and Glencore-backed Viterra, which are completing a merger. After years of legal wrangling between Vicentin and hostile creditors, the fate of the company now lies with the supreme court of Santa Fe, the province which contains Rosario — a riverside hub for shipping much of the world’s soy — and Avellaneda, the small town where Vicentin was founded nearly a century ago.
Prize resource
If the justices agree to the takeover by Bunge, Viterra and local co-operative ACA, the group would win assets including a stake in Renova SA. That’s a prized resource in soy trading as its Timbues plant in the Rosario hub can crush far more beans a day than any other facility in the world.
Viterra already controls 67 percent of Renova. It was first to broker the rescue plan with Vicentin, in which many creditors would get back only about 30 percent of their money. Bunge joined later.
Bunge’s US$8.2-billion acquisition of Viterra is expected to finalise in the next few months. It’s unclear how much extra Argentine antitrust scrutiny a takeover of Vicentin would draw.
Complicating the takeover are criminal cases brought against former Vicentin family directors who are accused of staging the 2019 default to conceal fraud. The ex-directors deny the charges. The cases are a hurdle because they put a legal bind on selling the Renova stake, the proceeds of which Vicentin needs to make debt payments, unless those injunctions are lifted.
A rejection of the rescue plan would likely push the case wide open into a so-called cramdown process where competing proposals could be lodged. Bunge, Viterra and ACA haven’t said what they’ll do under that scenario, but the hostile creditors are already drafting their own takeover bid. Those efforts are being led by Grassi, a brokerage whose exposure to Vicentin’s unpaid bill for US$350 million of crop supplies trails only ACA.
ACA and Bunge declined to comment. Viterra didn’t respond to a request for comment.
For now, Vicentin continues to stay afloat by charging fees to Bunge, Viterra and ACA to use its processing plants. Should the companies lose exclusivity in the bankruptcy process, Vicentin warns that those agreements would probably end, which risks putting it out of business. Grassi says Vicentin’s plants can operate without such support and that it would survive a drawn-out cramdown.
There is a final recourse to contest the upcoming ruling in Santa Fe: Argentina’s highest legal authority, the federal supreme court in Buenos Aires.
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