Shree Renuka Sugars, which earlier this year said that it was buying a majority stake in a Brazilian company, on Thursday said it is renegotiating the deal. In February this year, the company announced that it had bought a 50.79% stake in Brazil?s Equipav SA Acucar e Alcool for Rs 1,530 crore ($329 million). This however, was subject to the approval of an acceptable debt restructuring package by Equipav?s lenders. Equipav has a debt of Rs 3,821 crore ($822 million).
But in a statement to the exchanges on Thursday, Shree Renuka said, ?The company is renegotiating the Equipav deal and will send an update to the stock exchanges, if and when a revised agreement is signed.? Shree Renuka shares were down 2.12% to close at Rs 62.30 on the Bombat Stock Exchange on Thursday.
FE had reported in April that the deal had indeed run into trouble. With the passage of a new deadline for talks between the two firms to finalise the Indian company?s acquisition of the latter on April 22, analysts had said there were signs of one of the largest acquisitions in the sugar space facing hurdles.
The April 22 deadline was one that was set after the earlier 40-day deadline lapsed. With the global sugar industry entering a downcycle, and investors giving a thumbs down to sugar stocks on the bourses, the deal also ran the risk of falling through, analysts said.
However, the dynamics in Brazil for sugar are different. There, the cost of procuring cane is low. At the time of announcing the acquisition, Shree Renuka had said that its strategy for integration was to get raw sugar and export to India.
They had said that this way, the costing would work in their favour. Even after paying the freight charges, there would be a value accretion.