After the closure of Cisa Exportadora in Nicaragua due to financial issues within its parent company, Mercon Coffee Group, the company released a statement explaining that a combination of factors, including climatic and market-related challenges, led to unsustainable problems. This compelled them to seek protection under Chapter 11 of the bankruptcy law, filed in New York, the city where the company was founded in 1982. This ongoing process will enable the group, including Cisa Exportadora, to continue operating and fulfill their commitments to clients and employees.
“In the past three years, logistical disruptions stemming from the pandemic, coupled with the effects of frosts and droughts in Brazil, the prolonged market downturn, sustained price volatility, and the rapid rise in interest rates have collectively formed an exceptionally challenging operating environment for Mercon,” stated a portion of the letter signed by Oscar Sevilla, Chief Executive Officer of Mercon.
Unfortunately, the macroeconomic factors that Mercon faced persisted for longer than anticipated, and their financiers chose not to extend credit terms, significantly reducing their liquidity.
Lea también: “Esto afecta ante todo al pequeño productor”. Preocupación en zonas cafetaleras por cierre de Cisa Exportadora
Mercon files for bankruptcy
“As a result, the company no longer has the necessary financing to continue its operations. After evaluating all options, the board of directors has decided to seek protection under Chapter 11 of the United States Bankruptcy Code as the best alternative to safeguard the company’s assets,” the group announced.
Additionally, it explains that the bankruptcy process is still ongoing and will allow Mercon to continue operating to facilitate a restructuring. Failing this, they would be compelled to undergo an ‘orderly and fair’ liquidation process, ensuring that it ‘maximizes value for all parties involved,’ including employees, producers, clients, and service providers.
In the letter, Mercon’s CEO, Oscar Sevilla, asserts that despite the climatic and market obstacles faced in recent years, which led to the company’s bankruptcy, they tirelessly worked over many months, taking swift and decisive actions to keep the company running. As part of this quest for solutions, they recently sold a significant portion of the company’s shares with the aim of capitalizing it.
Puede leer también: Régimen de Ortega reacciona a quiebra de Cisa Exportadora y dice que le hará cumplir los compromisos comerciales y financieros
Lafise is one of their creditors
According to a report by Bloomberg News, the Mercon group, headquartered in the Netherlands, stated in its Chapter 11 bankruptcy filing that it has assets and liabilities totaling up to $500 million.
According to court documents accessed by Bloomberg News, Mercon has debts exceeding $360 million. Among its creditors are financial institutions and investors. The majority of the debt, $202.5 million, is part of a secured credit line granted by the Dutch entity Rabobank. Among its major unsecured creditors are Nicaraguan Banco Lafise S.A., Out Capital LLC, London Forfaiting Co., and the sustainability-focused investment fund & Green.
The Economist news portal highlights that according to the information within the reviewed court documents, in 2019, Mercon became one of the first commodity suppliers in the United States to issue a sustainability-linked credit line. Its pricing was tied to sustainability metrics.
