The future of Cerealto Siro Foods, the Spain-based co-manufacturing and private-label business, has been secured after investors and employees agreed a deal.
Last week, the Madrid-based biscuits and pasta maker paused production after potential investors walked away from a deal.
The move came after workers at most of its plants rejected the company’s cost-saving “competitiveness plan”, which included an employee pay freeze.
But now the country’s Ministry of Industry, Commerce and Tourism has announced it has brokered a deal that will see EUR100m (US$104.3m) of investment cash pumped into Cerealto Siro Foods and the guaranteed future employment of the company’s 1,700-strong workforce.
In an announcement from the Ministry yesterday (13 June), Industry Minister Reyes Maroto said she is “enormously satisfied” with the agreement.
“It provides an opportunity for an industrial future for the company and guarantees a future job for 1,700 families. In addition, this agreement is a good example of commitment to the opportunities and future of rural Spain, in this case Castilla y León, one of the priorities of the government of Spain,” he said.
Last week Cerealto Siro Foods admitted the situation was “critical” after workers at most of its plants rejected the company’s competitiveness plan, a necessary condition of investors Davidson Kempner from the US and Turkey’s Afendis Capital Management taking a majority stake in the business.
It said at the time: “The current situation means that we cannot legally continue to increase our level of debt with suppliers, so we have responsibly decided to temporarily stop production activity in the coming days and only manage the cash flow with the stock of finished product we have.”
The stoppage covered both the company’s domestic and foreign operations. Outside Spain, Cerealto Siro Foods is active in Portugal, Italy, the UK, the US and Mexico.
The halt in production followed the company – which is reputed to have debts of EUR300m – announcing it was to close a biscuit facility in Venta de Baños in Palencia province and relocate the 197-strong workforce to other group factories in Castilla y León as part of a cost-saving plan revealed in March.
Following the Ministry of Industry’s intervention, a deal has been struck which evidently satisfies both the investors and the company’s employees.
Cerealto Siro Foods has also agreed the Venta de Baños facility will stay open for at least two years.
The agreement includes a salary incentive after four years for workers at plants that have maintained 2021 production levels to recover, and add 2% to, the salary freeze agreed for the period of the competitiveness plan.
Cerealto Siro Foods declined to comment on the deal when approached by Just Food.