Mexican baker Gruma has announced that it is writing off investments in Monlinos Nacionales and Derivados de Maíz Seleccionado in Venezuela.
The company said it “lost control” of the businesses in 2013 but the investment remained on Gruma’s balance sheet as “investment in Venezuela available for sale”. The Venezuelan government nationalised Gruma’s factories in the country in January 2013 and Gruma sought World Bank arbitration to attempt to settle the dispute but was unable to regain control of the assets.
However, the company said that economic conditions in the country have prompted the group to write off the investments. “In light of the considerable depreciation of the Bolivar and Venezuela’s macroeconomic condition, Gruma has decided to write off the indirect net investment related to Monaca and Demaseca, as well as accounts receivable from certain subsidiaries with Monaca.”
The write-off will result in a non-cash charge of approximately MXN4.4bn (US$258m). As a non-cash charge, this will not affect GRUMA’s cash generation, the company added.