Banks behind troubled Brazil coffee traders could take $181 million hit

By Marcelo Teixeira

(Reuters) – which financed two Brazilian coffee traders that last week sought court-supervised debt restructuring have a total of 1.1 billion reais ($181.6 million) in credit with the firms, court documents seen by Reuters showed on Monday.

The amount refers only to advance money the banks gave to traders Atlantica and Cafebras in contracts linked to future coffee exports, known locally as ACCs, according to the documents. It is not known if the traders have other debt with roasters or coffee importers related to supply deals.

Brazil’s largest bank, state-controlled Banco do Brasil SA (OTC:), has the biggest share of the debt with 765 million reais, followed by Banco BTG Pactual (BVMF:) with 181.5 million reais and Banco do Nordeste with 100.9 million reais, the documents showed.

Other three banks had smaller credits pending from ACCs.

Atlantica and Cafebras, both owned by Brazilian coffee group Montesanto Tavares, filed a request last week to have a large part of its debt negotiated in court, a judicial move that can precede a bankruptcy proceeding if the negotiation is not successful.

The move left the coffee market on tenterhooks with coffee importers fearing they could not get their orders delivered or that other exporters in Brazil could run into financial troubles as coffee prices skyrocketed.

Banco do Brasil, BTG Pactual and Banco do Nordeste did not immediately return requests for comments.

Atlantica and Cafebras said in the court documents that the recent spike in prices was the latest challenge to their operations, since they caused margin calls on their hedging operations to sour.

One coffee broker, who sent some of the court documents to Reuters, said he was surprised by the size of the credit the two traders had, particularly the part from Banco do Brasil.

“It is a huge amount for companies that are not that big,” he said, asking not to be named given the sensitivity of the issue.

($1 = 6.0580 reais)