Argentine Surcos announces default of $13.5 million to suppliers

Date:12-16-2024

Argentine company Surcos has announced it will be unable to pay US$3.5 million in debts due in 2024 and over $10 million in obligations maturing in June 2025. 

One of Argentina's largest agricultural input traders and producers, Surcos justified its financial difficulties when presenting the decision to the National Securities Commission (CNV).

The company's debts were incurred through promissory notes issued when Surcos raised capital in the financial markets. In a communication sent to AgroPages, the company stated it remains open to renegotiating with creditors.

According to Sebastián Calvo, Surcos' President, the rating agency FIX SCR, affiliated with Fitch, downgraded the company's rating in recent weeks. "The rating downgrade reflects extremely restricted liquidity with a high refinancing risk," he explained.

Calvo affirmed that Surcos is taking all necessary measures to reverse the liquidity situation as quickly, efficiently, and effectively as possible. "We are in a comprehensive evaluation process of the remaining issued instruments, seeking a comprehensive solution that allows us to guarantee the company's normal functioning, prioritizing personnel, commercial and production operations to fulfill agreed deliveries," the executive assured.

According to him, input sector companies generally experienced difficulties in 2025. The company estimates its sales declined 32% compared to the previous year. Surcos' president explained that problems began with market contraction in 2023 when the sector globally retreated more than 30%.

Another factor that worsened Surcos' financial difficulties was the failure of its $36 million investment plan to "develop more ecological agrochemicals." The Argentine company is expected to surpass $500 million in sales by 2028, with the creation of research and development laboratories in Brazil and the United States focused on new gene editing technologies.

"Unfortunately, this international expansion plan is incompatible with the significant sales decline we are experiencing in the local market and difficulties in finding new financing. This has led to the impossibility of making the payment," the company stated. The $36 million spent on the plan ultimately consumed the operational cash flow.

Surcos has not yet determined whether it will seek judicial protection against potential creditors' actions. Argentina's Bankruptcy and Insolvency Law is similar to Brazil's judicial reorganization law, with the "preventive composition" process helping insolvent companies reorganize under judicial supervision.

Under simplified Argentine law, the debtor develops a restructuring plan that must be approved by creditors. If approved, it must be implemented under judicial oversight, which can determine asset sales to pay debts if the recovery plan fails to produce results.

(Editing by Leonardo Gottems, reporter for AgroPages)