Brazil's Bom Jesus offers creditors debt-for-land swap in reorganization

miércoles 10 de agosto de 2016 10:48 GYT

By Tatiana Bautzer

SAO PAULO Aug 10 (Reuters) - Grupo Bom Jesus, a Brazilian grain producer that filed for bankruptcy protection in May, has offered creditors stakes in a farm that could be later sold, in an effort to restructure 2.6 billion reais ($826 million) in debt.

According to documents that Bom Jesus filed in a court in the midwestern town of Rondonópolis, one part of the plan calls for an auction of farms and a grains trading subsidiary to raise cash. The company plans to continue operations while negotiating the debt restructuring.

Creditors can choose between extending debt maturities to up to 15 years or receiving notes that could eventually be converted into equity in Bom Jesus' farms, the document showed.

Bom Jesus, which is one of Brazil's largest grain producers, and financial advisor Pantalica Partners declined to comment.

The first option would ask secured creditors to forgive debt payments for two years and stretch out debt maturities to 12 years. Unsecured creditors could receive no repayments for three years, with debt maturities extended to 15 years and a yet-to-determined discount on the principal of their debt.

The second option entails a debt-for-equity swap for both unsecured and secured creditors, with Bom Jesus setting aside stakes in the São Benedito farm. Bom Jesus and its advisers will look for investors to buy stakes and funnel the proceeds to repay creditors which opt for the debt-for-equity swap.

The soybean and cotton producer owns 240,000 hectares (593,100 acres) of land.

Bom Jesus is the latest major grain producer to receive court protection in 2016 as Brazil's harshest recession in eight decades and rising borrowing costs magnified the woes of companies that took on heavy debt to expand in recent years. Reuters reported in June that Bom Jesus was in restructuring talks.

The company filed for bankruptcy protection after failing to agree on a refinancing plan with a group of 28 lenders led by Banco Santander Brasil SA.

($1 = 3.1467 Brazilian reais) (Additional reporting by Ana Mano; Editing by Guillermo Parra-Bernal and Lisa Von Ahn)