August 15, 2019 / 9:40 PM / a year ago

UPDATE 1-Brazil soy crusher Imcopa ends Petrópolis lease, eyes plant sale

(Adds eyes plant sale, details on lease termination, background on commercial relationship)

By Ana Mano

SAO PAULO, Aug 15 (Reuters) - Imcopa, one of Brazil’s largest processors of non-genetically modified soybeans, has decided to unilaterally terminate a leasing contract with brewer Grupo Petrópolis for two crushing plants, according to an internal memo seen by Reuters.

Sent by the company to suppliers and employees on Wednesday, the memo is signed by Imcopa executive Fernando Antônio Nascimento. Imcopa representatives declined to make him available for comment, saying only that the company was respecting the contract terms.

Imcopa said its bankruptcy recovery plan, approved in 2017, provides for the sale of the industrial operations at auction.

In the memo, Imcopa said its decision this month to rescind the contract is due to Petrópolis’ “breach of contract” regarding a stipulated profit-sharing payment.

Petrópolis denied any breach and said it would take legal action to ensure the terms of the lease are fulfilled. Representatives of the brewer said Imcopa’s owners were trying to end the arrangement in order to sell the plants.

Petrópolis representatives said in 2014, after Imcopa had applied for bankruptcy protection, the brewer signed a 10-year contract making it “responsible” for crushing soy at the plants and selling the meal and oil to markets as distant as Norway.

Petrópolis said it had committed about $300 million to keep Imcopa’s plants running, by buying raw materials and paying operating costs at the plants with about 640 workers.

Imcopa representatives said in an email on Thursday that “the exclusive client reimburses Imcopa for the processing costs.”

On its website, Imcopa touts capacity to crush 1.5 million tonnes of soybean per year, producing up to 240,000 tonnes of soy protein concentrate.

Brazil is expected to crush 43.2 million tonnes of soybeans this year, according to national oilseeds group Abiove.

In the memo, Imcopa said it was giving Petrópolis 120 days to remove all raw material, inputs and equipment from the Araucária and Cambé plants in the state of Paraná. (Reporting by Ana Mano Editing by Brad Haynes and Richard Chang)

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