Retailer in the agricultural input sector, AgroGalaxy filed its judicial recovery plan with the 19th Civil Court of Goiânia on Monday, 2nd, establishing a clear division between creditors who will maintain commercial relations with the company and those who do not intend to continue operating with the group. The document, finalized after a weekend of intense work, was presented within the legal deadline of 60 days and brings especially favorable conditions for rural producers and strategic suppliers.
“It meets the payment conditions that ensure the viability of operational continuity, resulting in the company’s financial recovery to fulfill the plan and honor its obligations to creditors”, said, in a note, Eron Martins, CEO of AgroGalaxy. He took charge of the company after the departure of the then president, Axel Labourt, and five directors during the worst moment of the company’s crisis.
In a statement to the market, the company informed that the plan provides for the full payment, without any discount, of credits owed to suppliers, workers and rural producers who qualify as partners of the group, with specific deadlines for each category. “The proposal combines conditions for us to resume profitability, preserving our relationship with producers and long-term commercial partners,” said Martins, in the statement.
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Discounts and deadlines
The proposal establishes that suppliers who maintain commercial relationships will receive 100% of the amounts owed within 10 years, while financial creditors will have a term of 11 years. For partner rural producers, the plan foresees payments starting in the first few months after approval of the recovery plan. Creditors who do not adhere to the partnership conditions will face significant discounts and longer terms.
The retailer’s judicial recovery reflects the crisis that has hit the agricultural input distribution sector in recent years. The combination of high interest rates, falling commodity prices and super harvests that drove down prices even further created a perfect storm for heavily indebted companies like , a conglomerate that was formed from the merger of large regional distributors in the sector – such as Agro100, Rural Brasil and Agroplanta.
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With debts of R$4.6 billion, in just two months since the recovery request, which was filed in September, the company implemented strong restructuring. It closed half of its stores – which fell from 149 to 74 units – and reduced its workforce by more than 40%. The new direction focuses on more profitable products, such as pesticides and seeds, reducing exposure to the fertilizer market, known for lower margins.
Loss of value
The company’s crisis, which recorded net revenue of R$9.3 billion in 2023, had repercussions on the financial market. Six agribusiness funds (Fiagros) have exposure to the company, ranging from 0.39% to 8.2% of its assets. On the stock market, the company’s shares closed Monday’s trading session at R$0.77, after fluctuating between R$0.57 and R$0.97. In the last 52 weeks, the shares – which were once worth R$4.14 – fell to R$0.38, reflecting the deterioration in the company’s market value, currently estimated at R$120.91 million.
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The plan delivered to judge Alessandra Gontijo do Amaral also guarantees the full payment of labor funds within 12 months, limited to 150 minimum wages, with the first installment of R$6,000 released within 30 days after approval. For small businesses, it offers a single payment of R$1,000 to those who agree to close the debt or receive full payment with a grace period of two years.
The next steps include a 30-day period for creditors to file objections to the plan. If there are disputes, a general meeting of creditors will be called for a vote. Approval will depend on different quorums in each class of creditors – labor, secured, unsecured and micro-enterprises -, with specific rules of simple or qualified majority.
AgroGalaxy is one of the main agricultural input retail platforms in the country, with a portfolio of 30 thousand customers. With the recovery plan, the group seeks to make its operational continuity viable, while addressing the liabilities accumulated during years of aggressive expansion via acquisitions in the input distribution market.
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Company avoids immediate sale of assets
AgroGalaxy has no immediate plans to sell Sementes Campeã – a unit that reported revenue of R$605 million and adjusted EBITDA (profit before interest payments, depreciation and amortization) of R$80 million last year -, as found by the Estadão/Broadcast.
According to a person close to the company, the focus now would be to reorganize the operation, and not consider the sale of assets. Possible strategic moves, he added, could be considered after the completion of the judicial recovery.
The group, formed from acquisitions made by the Aqua Capital fund since 2016 – including Rural Brasil, Agro100, Sementes Boa Nova, Grão de Ouro, Agro Ferrari and Ferrari Zagatto -, has operational restructuring as its priority after the recovery request. Sementes Campeã, which accounts for 11% of input revenues but generates 23% of EBITDA, is seen as a valuable asset that could arouse interest in the market, especially for its seed processing unit in Água Fria de Goiás.
In the legal field, however, the company faces challenges with value blockages. Banco ABC Brasil keeps around R$35 million retained, while Banco do Brasil obtained, last week, a favorable decision from the Court of Justice of Goiás (TJ-GO) that allows the retention of receivables given by AgroGalaxy as a guarantee of loans.
Due to the recovery, AgroGalaxy postponed the publication of its third quarter balance sheet.
The information is from the newspaper The State of S. Paulo.
