President Alberto Fernández announced Monday that the government will move to nationalise bankrupt agricultural giant Vicentin, will a bill sent to Congress in the next 60 days to expropriate the firm.
Critics quickly charged that the move was ideological, drawing parallels with other similar moves under Peronist governments, but Fernández said the move to save the bankrupt agro-export giant was predominantly motivated by a wish to save jobs.
"We are going to come to the rescue of Vicentín and defend its 2,600 workers,” the Peronist leader said at a press conference at the Casa Rosada, saying the move would bring peace of mind to the firm’s employees and agricultural producers, who depend on Vicentin to continue exporting.
The president said that the government would step in and run the firm for the next 60 days while congressional approval for the move is sought, with agricultural economist Gabriel Delgado serving as trustee.
"The law will declare the company of public utility. In this way a trust fund can be formed to administer the assets [of the firm]. The administrator will be YPF-Agro, of mixed capital and the agricultural section of the [state] oil company," said Fernández.
Vicentin said that it was halting payments and calling creditors back in December. Last year it was the fourth-largest exporter of cereals and oils, with a turnover of around US$3 billion.
The company was born as a family business in Santa Fe Province, before expanding into the export business. At its peak it began producing biodiesel and ethanol, and dipped into a host of other industrial activities.
Vicentín has a debt of about US$1.5 billion. Some US$300 million is owed to the state-run Banco Nación, which granted him credits shortly before he filed for bankruptcy during the Mauricio Macri adminisration, which prompted the initiation of a judicial investigation for fraud against the State.
In total, it is estimated that the company's debt amounts to 1,350 million dollars, of which some US $ 1,000 million would correspond to loans from banks and the rest to companies in the agricultural sector.
Among the firm’s creditors are hundreds of national agricultural producers, with approximately US$500 million outstanding in debt.
"The Vicentin Group is in an enormous crisis and the national state is its main creditor. That is why we have put in place measures that are intended to rescue the company so that it continues to function with its workers,” said a statement from the Presidency.
Vicentin dropped from the country’s sixth to fourth biggest exporter when the firm’s financial collapse started around a year ago. In the 2018-2019 season, it exported 8.5 million tons of grains and oils.
Overall, Argentina is among the top 10 food exporters in the world, particularly in soy, corn and derived oils.
"The purpose is to keep a very important company going," said Fernández at the press conference, adding that he was sure that residents in Santa Fe Province would be "very happy" about the move to nationalise the agricultural giant.
"Argentines have to be very happy because we are taking a step towards food sovereignty," added the president. "This is not a prosperous company that it occurred to us to expropriate – it is a company that was in a process of preventive bankruptcy. "
Opposition Juntos por el Cambio lawmakers rejected the move as "illegal and unconstitutional," claiming that it would "cost Argentines billions of dollars."
'Uncertainty and concern'
Officials from the company, which has been in default since December, said they had learned of the decision via the media and said they were worried by the turn of events. "The chosen path fills us with uncertainty and concern," the firm said in a statament.
"Since December 2019, the Vicentin Board of Directors has been exploring different alternatives to refinance its debt and recover the level of operation that it was known to have in the past, which in no way dates back to the last four years, but can be measured in decades of effort and investment. Vicentin has 90 years of history in Argentina – 90 years of fulfilling our workers, our suppliers and our clients" the company said.
"Among the alternatives under analysis were always the sale of assets and the possibility of association with national companies. Among those options, YPF Agro was always considered. We all know what YPF represents for Argentina in the hydrocarbons business, and also its very important link with our agriculture, for which at no time do we rule out that it may be an important actor in the future of Vicentin," it added.
"The chosen path fills us with uncertainty and concern. We learned of the decision via the media and we are conducting the necessary consultations to understand the characteristics and depth of the announced measures," the firm's directors added, saying the company always planned to "honour its debts."