November 12, 2007

 

Argentina soy giant Los Grobo mulls IPO after US$20 million

 

 

Argentina's leading soy producer, Grupo Los Grobo SA, is considering a public offering following its first bond issue last month, Andrea Grobocopatel, an executive director and member of the company's founding family, said Friday (November 9).

 

"We did a good job in issuing our first bond, now we have to be ready for the (stock) market," Grobocopatel told Dow Jones Newswires on the sidelines of the annual conference of Argentine think thank IDEA.

 

Her remarks follow Los Grobo's initial US$20 million bond issue on October 25. The proceeds from the issue will be used to refinance company debt and to fund the company's expansion through partnerships with some local peers, Grobocopatel said.

 

Los Grobo's debt amounts to US$35 million, including last month's bond issue, she said.

 

"I think all companies have to be ready for an IPO, it's the way towards more efficiency and transparency," she said, declining to confirm whether the company is actively preparing an IPO.

 

With an IPO, Los Grobo as, well as investors, could tap into the continuing growth of commodities prices.

 

Los Grobo manages 100,000 hectares of planted crops and harvests around one million tonnes of grain and oilseeds, generating annual sales of more than US$150 million.

 

The company owns and cultivates nearly 20,000 hectares, and plants the remaining amount on leased lands. It also operates a flour mill in Bahia Blanca.

 

Soy makes up the largest share of the company's production at 40 percent, followed by wheat at 30 percent, with sunseed and corn constituting the remainder.

 

Against this backdrop, Los Grobo, like most major agricultural producers, is well positioned to absorb a soy export tax hike announced Wednesday by the government, Grobocopatel said. Small producers are the most affected by the measure, she added.

 

"We have now to see how this money can be reinvested to support agro business growth," she said, suggesting that the state use the increased tax revenues to improve infrastructure in the interior of the country.

 

The soy export tax hike, to 35 percent from 27.5 percent, goes into effect on Monday, according to a resolution published in Friday's Official Bulletin.

 

In addition to soy, President Nestor Kirchner's administration also hiked the tax on soyoil to 32 percent from 24 percent. Wheat export taxes were upped to 28 percent from 20 percent, and the tax on corn rose to 25 percent from 20 percent. Sunflower seed exports will now be taxed at 32 percent, while sunflower seed oil exports will carry a 30 percent duty.

 

The export tax on wheat flour remains unchanged at 10 percent.