Paris | Reuters – Margarita Louis-Dreyfus, top shareholder of commodity giant Louis Dreyfus Company (LDC), said she had secured financing for a deal that requires her to buy out family minorities, a move that has created uncertainty over the firm’s funding.
Minority family shareholders asked in 2015 to sell 16.6 percent of LDC’s holding company to Margarita Louis-Dreyfus’ Akira trust in a buyout estimated at $800-$900 million.
The obligation to purchase the shares, under a long-term arrangement established by Margarita Louis-Dreyfus’ husband Robert before his death in 2009, has increased doubts about the group’s finances as it has coincided with a period of lower group profit and financial trouble at its Brazilian sugar subsidiary Biosev.
“I am very pleased to have completed this (financing) process, reconfirming my commitment to safeguarding the Louis-Dreyfus heritage and shaping its long-term future,” Margarita Louis-Dreyfus said in a statement, without giving details of the financing.
An LDC spokeswoman later added that the financing consisted of “a bank loan”.
She declined to give further details on either the loan or the terms of the share buyout, citing confidentiality requirements.
The spokeswoman’s response indicates that the Akira trust would not be using its portion of a $411 million dividend to LDC shareholders this year to contribute to covering the cost of the share buyout.
LDC awarded this year a $411 million dividend to its shareholders, including a special $100 million payment for the divestment of the group’s lucrative metal trading unit.
But the Akira trust’s portion of the dividend would represent less than half of the expected cost of the buyout, based on the holding company’s book value.
LDC does not intend to depart from its dividend practice, consisting of a payout of up to 50 percent of net earnings and ad-hoc special dividends related to divestments, Margarita Louis-Dreyfus added in the statement.
She also said she would “keep all options open in terms of strategic partnerships, if appropriate for the business” to support LDC’s growth, reiterating similar comments she has made in recent years.
The tough period for Louis Dreyfus has fuelled speculation about its future at a time when agricultural traders have faced declining margins, leading to U.S.-based Bunge becoming a takeover target.
LDC’s announcement in September of the departure of both its chief executive and finance chief added to rumours about instability at the firm.
Louis Dreyfus, whose roots lie in eastern France, has stressed that results were steadily improving after a restructuring push and Margarita Louis-Dreyfus said in the statement that “we are on track for solid results in 2018 and beyond.”