SAO PAULO, Aug 19 (Reuters) - Brazilian sugar group Clealco Açúcar e Álcool SA reached a deal with banks late on Friday to refinance almost 1 billion reais ($317 million) in debt, three people with knowledge of the operation said, and a company executive confirmed the deal.
The refinancing deal reduced Clealco’s short-term debt to 5 percent of the total from 75 percent previously as the maturities have been extended, the sources said.
Itaú Unibanco Holding SA, Banco do Brasil SA , Banco Votorantim SA, Banco Santander Brasil SA , Banco Bradesco SA, Banco ABC Brasil SA and the Brazilian unit of Cooperative Rabobank UA have extended maturities by up to 7 years and agreed to grace periods of up to two years.
Most of the company´s debt will mature from 2022 to 2024, and Clealco will be exempt from paying interest and principal for one to two years, depending on the creditor.
Clealco director Gabriel Carvalho said the new terms will give the company a stronger capital structure.
The banks did not respond to requests for comment on Saturday. Financial advisory firm Pantalica Partners assisted Clealco in the restructuring, Carvalho said.
Since 2010, many Brazilian sugar companies have filed for bankruptcy protection or closed doors. Years of artificially low gasoline prices in Brazil squeezed ethanol profit margins and a long period of depressed sugar prices hurt their finances.
Clealco owns three sugar mills in the main Sao Paulo cane belt, with capacity to process around 10 million tonnes of cane per crop. Its Queiroz mill, built in 2006, is one of the largest sugar producing installations in the country.
“The restructuring will adjust the company’s capital structure and bring cash generation to appropriate levels,” Clealco’s Carvalho said.
The director said the company agreed to reduce debt levels through asset sales such as agricultural land. “The banks agreed to refinance because they saw the recovery potential”, Carvalho added.
$1 = 3.1462 reais Additional reporting by Guillermo Parra-Bernal; editing by Diane Craft