Verde AgriTech Ltd (TSX: NPK, OTCQX: VNPKF) has announced a significant milestone in its financial restructuring efforts, successfully securing a debt renegotiation agreement that encompasses over 92% of its total outstanding debts. This agreement, which is expected to bolster the company’s financial health, comes as Verde navigates challenging market conditions in Brazil’s agricultural sector.
The recent agreement involves creditors representing R$11.3 million (approximately $2.3 million USD) of the company’s total debt, who did not initially adhere to the proposed terms. These non-adherent creditors will now be subject to a revised payment structure that includes a 75% reduction in their outstanding balances. The new interest rate will be linked to the Taxa Referencial (TR), a Brazilian benchmark interest rate currently set at 0.82% per year, significantly lower than the previous rate of 16.59% per annum.
Upon receiving court approval, which is necessary for the agreement to take effect, Verde AgriTech will benefit from a total write-off of R$8.5 million (approximately $1.7 million USD) from its debt load. The renegotiated terms for non-adherent creditors include a 75% reduction on the total debt, an 18-month grace period during which principal and interest payments will be deferred, and a repayment term that involves monthly installments over 108 months starting after the grace period. Additionally, interest will begin to accrue at the Taxa Referencial (TR) rate once the grace period concludes, with payments structured in monthly installments following this period.
This renegotiation is a crucial step for Verde AgriTech as it aims to stabilize its operations amid rising input costs and fluctuating commodity prices that have recently plagued Brazil’s agricultural sector. The company’s CEO, Cristiano Veloso, emphasized that this strategic move not only alleviates immediate financial pressures but also positions Verde for future growth and sustainability.
The successful renegotiation with creditors is expected to generate substantial cash savings estimated at R$115 million (approximately $23 million USD) over the next two years. By extending repayment terms and reducing interest rates, Verde aims to enhance its liquidity and operational flexibility—essential components for navigating ongoing economic challenges.
Verde AgriTech is committed to advancing sustainable agricultural practices through innovative solutions in specialty multi-nutrient potassium fertilizers. The company’s mission focuses on increasing agricultural productivity while enhancing soil health and contributing positively to environmental sustainability. Leveraging proprietary technologies and its unique position within Brazil’s agricultural landscape, Verde addresses critical global challenges such as food security and climate change.
In addition to its core operations in fertilizer production, Verde is actively involved in carbon capture initiatives, further underscoring its commitment to sustainability and responsible agriculture. The company’s strategic focus on eco-friendly practices positions it favorably within a market increasingly driven by environmental considerations.
As Verde AgriTech moves forward with this debt renegotiation agreement, it not only secures a more manageable financial structure but also reinforces its dedication to sustainable agricultural practices. The anticipated court approval of this agreement will mark a pivotal moment for the company as it seeks to enhance its operational resilience and contribute positively to Brazil’s agricultural sector amidst challenging economic conditions.
