Tonon Files for Bankruptcy Protection
Brazil sugar and ethanol producer Tonon Bioenergia SA, which operates three mills with a total capacity to process 8.2 million tonnes of cane per year, has sought court protection against creditors, the company said late on Wednesday.
Tonon said its debt, largely denominated in dollars, soared following the recent weakening of Brazil's currency. The sugar group's debt in Brazilian reais jumped by 69 percent by the end of September to 2.66 billion ($707 million) compared to the same time a year earlier.
"The main objective of this request is to restore the capital structure and preserve business continuity," the company said in a statement.
More than 70 mills in Brazil have filed for court protection against creditors in the past three years as a long period of low sugar and ethanol prices has hurt their profitability.
More recently, the local currency's weakness, despite increasing the return in reais on sugar export deals, has raised indebtedness for companies with a large share of their liabilities denominated in dollars.
Tonon also said tough financing conditions in the Brazilian market further harmed its ability to manage its finances. To tackle inflation running in double-digits, the central bank has signaled it could raise interest rates in January from a nine-year high of 14.25 percent.
Tonon's request comes at a time when international sugar prices are finally recovering from their lowest values in more than five years and local ethanol prices hit the highest levels since 2011.
(Reporting by Marcelo Teixeira)