May 27, 2020

Company reduces debt cost by R $ 1.7 billion

Company reduces debt cost by R $ 1.7 billion

Payment term is extended to five years

Coruripe Mill completed the approval process of an agreement with a union of eight banks, coordinated by two members of this group, for the restructuring of the debt of about R $ 1.7 billion. Among the main points negotiated are the extension of the payment flow from three to five years and the reduction of 1% per year in the cost of loans, both in dollars and in reais.

The agreement changed the payment schedule, with 10% of the debt in the current crop and 15% in each of the next four seasons, with settlement of the final 30% in 2025. According to Coruripe's president, Mario Lorencatto, the negotiation allowed the company to readjust debt maturity terms in relation to the projected cash flow from operating activities. "We will have a more adequate cash flow, with a reduction of R $ 400 million in the need for funding in the current harvest, and a more robust guarantee structure", he says.

He says that a new Covenant was adopted, with the forecast for improving the net debt / Ebitda ratio from 3 (in March 2020) to 2 (in March 2025). The guarantees were also restructured, with the addition of part of the land for sale and shares of the Instituto do Açúcar e Álcool (IAA) in second degree. In relation to annual Capex governance, R $ 600 million was defined, of which R $ 400 million was allocated to the agricultural area and R $ 200 million to industry and other investments. The disbursement flow of the principal and interest installments will be in September, December and March.

In addition to these initiatives, which place Coruripe in a privileged position, even in times of uncertainty, the company works on a strong efficiency program, which will guarantee approximately R $ 90 million in savings, as well as on innovative fronts in the management of suppliers of sugarcane and business process automation. “Our company has repositioned itself on all fundamentals in the past two years and we have received recognition from our market partners”, says Lorencatto.

The four plants located in Minas Gerais are in full milling activity, with an advance in relation to the budget and performance above the past harvest. The Coruripe (AL) unit follows the normal work of refurbishing and installing a new boiler and refinery for the current harvest. Preventive measures for Covid-19 obey the best market practices and the guidelines of the authorities, aiming to preserve the health of employees and the continuity of activities. The reinforcement of cash made by Coruripe to face the times of uncertainty also allowed the company to keep the jobs and all the salary conditions of the employees, as well as to fulfill its obligations, including anticipating liquidations, reinforcing once again its commitment to people and its solidity in the market.