Agro-company Los Grobo Agropecuaria and its subsidiary Agrofina, both of them part of the Grupo Los Grobo holding, have told the National Securities Commission (CNV, for its Spanish initials) that they were unable to pay debt obligations by their stipulated deadlines. 

Los Grobo Agropecuaria SA is one of Argentina’s main soybean and wheat producers. Besides growing and trading grains, it distributes agricultural inputs. The group has a yearly turnover of approximately US$800 million.

They explained that this was due to a lack of market liquidity and adverse economic factors. The companies defaulted on over AR$400 billion (around US$400 million) in debt. 

Los Grobo Agropecuaria sent a note dated December 27 telling the CNV that it was unable to pay US$100,000 in the form of a short-term debt instrument issued by the company (known as a pagaré bursátil) that defaulted the day before. It also said that it will not be able to pay upcoming debt scheduled to reach maturity on March 31, 2025. 

The company attributed these complications to a growing lack of liquidity in the stock exchange debt market for members of the agricultural sector, difficulties in collecting payment on certain credit lines, and financial problems of an associated enterprise. 

Agrofina, which is devoted to developing, producing, and selling crop-protecting products, told the CNV it was unable to pay a AR$400 billion (around US$400 million) debt. It also notified the commission that it would be unable to pay the sixth interest installment and the first capital amortization installment of its Negotiable Obligations Class XII, due to mature on December 30, 2024. 

The company pointed out that a drop in sales of agricultural products, a declining phytosanitary market, and an excess in its distribution channel stock have compromised its cash flow. The company put out a statement once its default became public knowledge. 

“Within a market going through a challenging contraction, we are experiencing a temporary lack of liquidity that impacts the ability to pay debts issued by the group’s companies. We are working to resolve this situation and analyzing all alternatives that allow us to comply with our financial obligations while prioritizing our commitments to producers, suppliers, collaborators, and clients. From an operational standpoint, our business is healthy. Our priority is to continue our commercial and productive operations and to keep our business of providing supplies, services, and knowledge for the agricultural supply chain growing, as we have been doing for the past 40 years.”

The inability of Los Grobo to meet their payment deadlines, a situation similar to what Argentine agro-company Surcos is also experiencing, puts the spotlight on the role of credit rating agencies. Just a few days ago, December 20, they focused on the company but were cautious. At the time, credit rating agency Fix, Fitch Ratings’ local affiliate, lowered Los Grobos Agropecuaria’s long-term debt rating from BBB(arg) to BBB+(arg) and gave it a Negative Rating Watch. 

In their report, Fix pointed out that although the company had cancelled its “elevated debt maturities,” US$36 million concentrated between December 2024 and January 2025, as of September 2024 they had a total debt of US$83 million, which was considered high compared to the company’s ability to generate cash flow. 

“Fix estimates that the company can face its US$23 million debt maturities of the next quarter. Liquidity, however, will be tight and they do not show great financial flexibility, together with a negative cash flow of US$2.9 million for the first quarter of 2025 and the postponement of integrating pending capital.”

Originally published in Ámbito