S&P upbeat on Louis Dreyfus investor deal

PARIS (Reuters) - Louis Dreyfus Company’s (LDC) [AKIRAU.UL] deal to sell a large stake to Abu Dhabi investment firm ADQ should rapidly improve the commodity trading group’s financial position, S&P Global said after issuing its first credit rating for company.

LDC on Wednesday announced an agreement to sell a 45% stake to state-owned ADQ, the first outside investment in the family-controlled trader’s 169-year history.

S&P, which gave LDC a long-term rating of BBB- and a positive outlook, said the deal would “have immediate positive financial implications for LDC”. The transaction is expected to close by mid-2021.

The value of the deal has not been disclosed, but LDC has said that at least $800 million of the proceeds would go towards repayment of a $1 billion loan to finance a bailout of Brazilian sugar group Biosev BSEV3.SA.

Proceeds from the ADQ deal should also mean that LDC’s main shareholder, Margarita Louis-Dreyfus, no longers needs to take out extraordinary dividends, S&P added.

The ratings agency projected that LDC’s adjusted debt ratio should decrease to about 2.5 in the months after the deal closes, against 3.5 in the 12 months to the end of last June.

The ADQ deal followed a search by Margarita Louis-Dreyfus for an investor to relieve debt built up to buy out other family shareholders.

LDC’s first public credit rating will give the company broader access to debt markets, the group said in a separate statement.

S&P’s positive outlook also reflected LDC’s strong operating performance this year, supported by its oilseeds business in emerging markets and a group savings plan, the ratings agency said.

It forecast that LDC’s earnings before interest, tax, depreciation and amortisation (EBITDA) would rise to $1.2 billion this year and stabilise at that level in 2021.

LDC, which posted first-half EBITDA of $634 million for continiuing operations, has pointed to improved trading prospects this year.

Its profitability, however, is expected to remain slightly below the industry average, S&P added.

Reporting by Gus Trompiz; Editing by David Goodman