Margarita Louis-Dreyfus, the billionaire at the helm of the eponymous agricultural trading house, pledged her controlling stake as security for a $1.03 billion loan from Credit Suisse Group AG in early 2019.
The pledge, revealed in a corporate filing last month, was made for a loan used to buy a 16.6% stake in the company from family members. In exchange, Akira BV, the main holding company for Louis-Dreyfus’s stake in the commodity trading house, put up all its shares as backing for the funds.
The steep collateral requirement shows how her ability to keep ownership of the trading house is coming under strain because of commitments to other family members and a downturn in profitability. If Louis-Dreyfus can’t repay or refinance the loan, Credit Suisse could take control of the 169-year-old business, which operates in oilseed, sugar and cotton markets.
A spokeswoman for Louis-Dreyfus didn’t immediately return a call for comment.
Louis-Dreyfus has been forced to buy shares under a long-standing agreement with relatives. After the relationship between the billionaire and the relatives soured in recent years, they have tendered increasingly larger amounts of equity in the trading house, forcing her to spend hundreds of millions of dollars.
In late 2018, Louis Dreyfus announced funding to buy the shares was secured, but the details haven’t previously been reported. The share pledge was revealed in a Dutch corporate filing dated Dec. 24 by Akira, a holding company for Louis-Dreyfus’s stake in the commodity trading house.
In the filing, Akira said that “on or about 25 January 2019,” it borrowed $1.03 billion from Credit Suisse in order to buy the minority stake from other members of the Louis-Dreyfus family. “In anticipation of the borrowing of the foregoing funds, the Company pledged all of its shares of LDHBV to Credit Suisse (Switzerland) Ltd,” it said in the filing.
LDHBV refers to Louis Dreyfus Holding BV, the Dutch holding entity for the trading house, which is called Louis Dreyfus Co. It wasn’t clear from the filing whether the additional 16.6% stake purchased in January 2019 was subject to the pledge. Another 10% of her shares in Louis Dreyfus Holding are held through a separate vehicle.
Still, the pledge underscores the challenges facing Louis-Dreyfus. While she has been forced to take on additional debt to buy out minority stakes, her trading company is grappling with declining profits and a raft of executive departures. Chief Executive Officer Ian McIntosh has approached potential buyers for a minority stake, so far without success. In November, the company announced plans to overhaul operations and cut costs.
The equity value of Louis Dreyfus Holding, which owns struggling Brazilian sugar processor Biosev SA as well as Louis Dreyfus Co., fell to $4.1 billion at the end of 2018 from $4.9 billion the year before.
The trading house, founded by Leopold Louis-Dreyfus in 1851, is the D of the storied ABCD group of commodities merchants that dominate global agriculture trading. The other three companies are Archer-Daniels-Midland Co., Bunge Ltd. and Cargill Inc.
This article was provided by Bloomberg News.
