SOS wants rice sale to cut debts

SOS wants rice sale to cut debts

Spanish olive oil maker SOS Corporacion Alimentaria has given the green light to sell its rice business.

After months of speculation, SOS yesterday (8 February) confirmed that it would dispose of its rice units in Spain, the US and Holland.

In a statement, the Spanish food group added that the future of its Portuguese business depended on the existing commitments it has with its partner in the country, Luso.

The news follows speculation over the future of SOS, with reports suggesting that the company would divest its rice business while the group rejected a takeover approach for the company by fellow Spanish food major Nueva Rumasa.

SOS has struggled under its high debt levels and has broken covenants on loan agreements, with finance costs causing the olive oil maker to post a half-year loss in August.

A spokesperson for the company confirmed that it has looked to boost its balance sheet and that the proceeds from the sale will be used to reduce the group's debts.

SOS has initiated a restructuring plan to cut its debt to some EUR650m (US$966.6m) by 2013, from EUR1bn now.

Potential bidders include domestic firms Ebro Puleva and Rumasa – both of whom have previously confirmed interest in the business – while international players are also said to be circling.

SOS declined to comment on the possible bidders, but suggested that the unit was expected to generate "significant interest".

SOS's shares rose from EUR2.12 prior to the announcement to close at EUR2.26 yesterday.

Credit Suisse, the bank advising SOS on its financial restructuring, will oversee the sale.