Nidera Taps Cofco for More Funds to Avoid Loan-Limit Breach

  • Dutch grain trader was close to covenant breach on main loan
  • Chinese firm and other shareholders give $40 million support

Nidera BV, a division of China’s largest food company, took additional loans this year from shareholders to avoid breaching credit covenants, according to an annual filling.

The credit troubles are another setback for China’s Cofco Corp., which took control of Dutch grain trader Nidera two years ago to create a global agricultural commodities trading house. This week, Nidera disclosed that it posted an annual loss in 2015 after the actions of a rogue trader in biofuels cost it almost $200 million.

Nidera borrowed $40 million from Cofco and a group that represents the families who founded the company nearly a century ago, according to its annual filing to the Dutch Chamber of Commerce. It took the loans after coming close to breaching a covenant on its tangible net worth linked to its main revolving credit facility.

"The losses on biofuels brought us to a situation where we preferred to have greater headroom on a main funding covenant and our shareholders supported this through a loan," said Bert Ooms, a spokesman for Nidera. The loan "was drawn down in full in the first quarter of 2016," he said.

Calls to Cofco seeking comment weren’t answered.

Credit Terms

Nidera said that under the terms of its revolving credit facility -- which underpins its trading business -- it needs to have a margin of $500 million related to its tangible net worth, the value of assets that can be immediately sold. At the end of last year, the headroom stood at just $509 million. Nidera arranged the credit facility with banks including ABN Amro Bank NV, Bank of China Ltd., ING Groep NV and Cooperatieve Rabobank UA.

Cofco bought 51 percent of Nidera in 2014 in a deal that valued the grain trader at $4 billion, including debt, a person with knowledge of the matter said at the time. The rest of the Rotterdam-based company is controlled by the founding families.

S&P Global Ratings this week downgraded the credit rating of Cofco’s listed company in Hong Kong. Although its reach has increased after buying Nidera and other trading firms, profitability has weakened because the commodity trader is in the midst of “the trough of the industry cycle," the ratings company said.

In the three years to the end of 2015, Nidera accumulated a net loss of $188 million in biofuels trading due what it called "severe" irregularities by a single trader.

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