June 11, 2020 / 8:42 PM / a month ago

Exclusive: Argentine takeover of soy crusher Vicentin may scuttle Glencore's Renova bid - sources

BUENOS AIRES (Reuters) - A planned bid by Glencore (GLEN.L) to buy out the remaining stake in its Argentine soy crushing joint venture Renova will likely be scuttled by the government’s plan for a state takeover of bankrupt partner Vicentin, two sources close to the situation told Reuters.

FILE PHOTO: A truck unloads soy grains in a silo bag on a farmland in Chivilcoy, on the outskirts of Buenos Aires, Argentina April 8, 2020. Picture taken April 8, 2020. REUTERS/Agustin Marcarian/File Photo

However, the government’s planned takeover of Vicentin, which holds 33% of Renova alongside majority partner Glencore, should not dent agricultural exports from Argentina, said both sources, who asked not to be named due to the political sensitivity of the matter.

Glencore and the president’s office declined to comment. A government source, who also asked not to be named, said it was too early for the state to decide what it would do with Vicentin’s stake in Renova.

Center-left Peronist President Alberto Fernandez on Monday decreed an intervention in Vicentin, once Argentina’s No. 1 exporter of soy byproducts, while his administration seeks Congress approval for a state takeover.

Renova, located on the banks of the Parana River in Argentina’s soy hub of Rosario, is one of the world’s biggest soy crushing plants. Glencore, which owns 66.7%, had offered to buy Vicentin’s stake in the plant for $325 million, Reuters reported previously, but the deal had become bogged down in Vicentin’s bankruptcy proceedings.

“Glencore would still like to buy the remaining share of Renova, but the government is very unlikely to sell. I don’t see that happening,” one of the sources close to the bid talks said, adding that neither Vicentin nor Glencore was told in advance of Monday’s decree.

A second industry source with knowledge of the situation also said that Glencore’s bid for full ownership of Renova would likely be stalled by the government’s intervention in Vicentin.

“But this will mean nothing in terms of Argentine supply of soy products. Argentina will keep crushing 40 million to 42 million tonnes of soybeans per year,” the source close to the talks said.

Fernandez is set to meet with Vicentin’s management late on Thursday.

Asked earlier this week about Vicentin’s stake in Renova, Fernandez said it was “premature” to make any announcements.

Local media reported that Fernandez might bow to private sector concerns and cancel the takeover. But the two sources said that was unlikely.

“The government now has a strategic foothold in the most important sector of the economy. No one has ever seen a Peronist government say, ‘Lets stop and go in reverse.’ The question is how will Glencore deal with having the government as its new partner,” said the first source close to the talks.

Vicentin went broke after going on a credit-fueled expansion last year. Argentine political uncertainties related to the October 2019 presidential election sparked a market crash and led international banks to pull back from the crisis-prone country, further pressuring the company.

Vicentin has more than $300 million in commercial debt and more than $1 billion in loans from local and international banks.

Renova had been owned 50-50 by Glencore and Vicentin until the local company ran out of money late last year. Glencore bought an additional 16.7% of Renova in November and had been angling to purchase the rest.

Vicentin, founded in 1929, stopped crushing after defaulting on its debt but Glencore had continued paying Renova employees in anticipation of an eventual takeover.

Reporting by Hugh Bronstein, additional reporting by Maximilian Heath; Editing by Adam Jourdan and Rosalba O'Brien

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