SPAIN—Cerealto Siro Foods a Spanish co-manufacturer and private-label producer of cookies, cereals and pasta has averted bankruptcy with US$104.3 million cash injection secured by the country’s Ministry of Industry, Commerce and Tourism.
The Madrid-headquartered company – reputed to have had debts of over US$312.7 million – was facing closure after most of the company’s 1,700-strong workforce rejected its cost-saving ‘competitive plan’.
Its Competitive Improvement Plan – revealed in November to ‘reduce excess fixed costs’ – involved the closure of a biscuit facility in Venta de Baños in Palencia province and the relocation of the 197 workers to another factory in Castilla y León. It also included an employee pay freeze.
The plan was a formal condition of private equity investors Davidson Kempner Capital Management from the US and Turkey’s Afendis Capital Management taking a majority stake in the business, so when an agreement was not reached, the investors walked away from the deal.
The company 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.”
Following the Ministry of Industry’s intervention, a deal has been struck which evidently satisfies both the investors and the company’s employees.
Cerealto has also agreed to keep the Venta de Baños facility 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.
“It provides an opportunity for an industrial future for the company and guarantees a future job for 1,700 families,” said Industry Minister Reyes Maroto.
“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.”
The government intervention also brought Afendis Capital Management and Davidson Kempner back to the table, both of which have now signed a definitive agreement with Juan Manuel González Serna (Cerealto’s founder and majority shareholder) to transfer shares and clean up the company’s balance sheet.
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