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Brazil's GVO proposes haircut of 70 pct to bondholders -source
Wed Mar 9, 2016 6:17pm GMT
By Tatiana Bautzer and Reese Ewing
SAO PAULO, March 9 (Reuters) - Brazilian sugar and ethanol group Grupo Virgolino de Oliveira (GVO) is proposing bondholders take a roughly 70 percent haircut on its $735 million in bonds, a source with direct knowledge of the matter said.
Formerly the biggest milling group within Copersucar, Brazil's biggest sugar trader, GVO has three bond issues outstanding. The company has $300 million maturing in 2018 , $135 million in 2020 and $300 million in 2022.
The company stopped paying interest on them in June 2014, and this week is making the first restructuring proposal to bondholders. The shortest bond, maturing in 2018, was quoted this Wednesday at 2.5 cents on the dollar.
GVO is offering to issue new bonds with longer maturities to replace the old ones. On top of the haircut and longer maturities, the company is trying to get lower interest rates. The original bonds had coupons ranging from 10 percent to 11.75 percent.
Bondholders have not yet responded to the offer, but they have the option of refusing it and trying to recover collateral on two of the bond issues.
The group owns four mills in the main cane-producing state of Sao Paulo. As with many Brazilian mills, GVO ran into trouble after over investing in Brazil's ethanol boom years leading up to 2009, only to see those bets crushed by government policy to subsidize gasoline prices.
GVO Chief Executive Joamir Alves said he had no comment on the details of an offer to bondholders.
More than 100 of Brazil's once 400-plus mills have closed their doors or entered bankruptcy protection over the past eight years, as a glut of sweetener pressured prices.
Brazil's currency, the real, has depreciated nearly 40 percent against the dollar over the past year, inflating unhedged dollar-linked debts of GVO and other mills.
Sugar futures have begun to recover in recent months as a global supply deficit has supported prices. In addition, the Brazilian government's decision to raise gasoline prices has improved returns for mills from biofuel production. However, many mills are still struggling to service their debt. (Reporting by Tatiana Bautzer; Editing by Reese Ewing and David Gregorio)
Wed Mar 9, 2016 6:17pm GMT
By Tatiana Bautzer and Reese Ewing
SAO PAULO, March 9 (Reuters) - Brazilian sugar and ethanol group Grupo Virgolino de Oliveira (GVO) is proposing bondholders take a roughly 70 percent haircut on its $735 million in bonds, a source with direct knowledge of the matter said.
Formerly the biggest milling group within Copersucar, Brazil's biggest sugar trader, GVO has three bond issues outstanding. The company has $300 million maturing in 2018 , $135 million in 2020 and $300 million in 2022.
The company stopped paying interest on them in June 2014, and this week is making the first restructuring proposal to bondholders. The shortest bond, maturing in 2018, was quoted this Wednesday at 2.5 cents on the dollar.
GVO is offering to issue new bonds with longer maturities to replace the old ones. On top of the haircut and longer maturities, the company is trying to get lower interest rates. The original bonds had coupons ranging from 10 percent to 11.75 percent.
Bondholders have not yet responded to the offer, but they have the option of refusing it and trying to recover collateral on two of the bond issues.
The group owns four mills in the main cane-producing state of Sao Paulo. As with many Brazilian mills, GVO ran into trouble after over investing in Brazil's ethanol boom years leading up to 2009, only to see those bets crushed by government policy to subsidize gasoline prices.
GVO Chief Executive Joamir Alves said he had no comment on the details of an offer to bondholders.
More than 100 of Brazil's once 400-plus mills have closed their doors or entered bankruptcy protection over the past eight years, as a glut of sweetener pressured prices.
Brazil's currency, the real, has depreciated nearly 40 percent against the dollar over the past year, inflating unhedged dollar-linked debts of GVO and other mills.
Sugar futures have begun to recover in recent months as a global supply deficit has supported prices. In addition, the Brazilian government's decision to raise gasoline prices has improved returns for mills from biofuel production. However, many mills are still struggling to service their debt. (Reporting by Tatiana Bautzer; Editing by Reese Ewing and David Gregorio)
