Trader Nidera Said to Find $150 Million Financial Hole in Brazil

  • Chinese food company Cofco owns the Dutch grain trader
  • Nidera said it review found a balance-sheet "overstatement"

Nidera BV, a division of China’s largest food company, has found a $150 million hole in the accounts of its Brazilian division, according to a person familiar with the matter.

It’s the latest setback for the grain trader after revealing earlier this year a nearly $200 million loss due to a rogue trader. The losses are also a blow for China’s Cofco Corp., which took control of Nidera two years ago to create a global agricultural commodities trading house.

Nidera said in a statement it found an "accounting issue" in its Brazilian unit as part of a company-wide review. The Dutch grain trader described the problem as an "overstatement" of the balance sheet, without providing more details. The person familiar with the matter, who asked not to be named because the information is confidential, also declined to provide further details.

"Because of the potential impact on bank covenants, Nidera has informed its lenders and Cofco has underwritten the financial support required to ensure compliance with the covenants," the company said on Wednesday.

The Financial Times first reported the accounting issue.

The Dutch grain-trading firm earlier this year revealed that in 2015 it suffered its first annual loss in five years because of the impact of a rogue trader in its biofuels business, according to filings in the Netherlands.

The trading house restated accounts for 2014 and 2015 and changed its financial year. In the 15 months to the end of December 2015, Nidera lost $135 million. That compares with profit of $42.9 million in the 12 months ending Sept. 30, 2014. To avoid breaching breaching credit covenants, the Dutch company borrowed $40 million from Cofco after the biofuel losses, it said in regulatory filing with the Dutch Chamber of Commerce in July.

Cofco bought 51 percent of Nidera in 2014, a deal that valued the Dutch 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, established in 1920, was controlled by the founding families until earlier this year, when Cofco announced a deal to buy the rest of the group.

By integrating Nidera into Cofco International, which includes the agricultural assets of Noble Agri Ltd, the Chinese state-owned group aims to create a global giant that can compete with companies including Archer-Daniels-Midland Co., Bunge Ltd., Cargill Inc., and Louis Dreyfus Co. The four companies, the world’s largest grain traders by volume, are known collectively as the “ABCD.”

The problems in Brazil will not affect the integration between Nidera and Cofco International, said Bert Ooms, a spokesman for Nidera. Cofco’s full acquisition of Nidera is still awaiting final approval in Australia, he added.

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