Ruiz Coffees negotiates debt restructuring with creditors
Grupo Ruiz Coffees, Brazil’s second-largest coffee producer after Cooxupé, is seeking a negotiated solution with creditors to overcome its financial difficulties while keeping operations running.
Farm-debt decree will enable R$100bn renegotiation
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The company is discussing transferring farmland pledged as collateral into a fund owned by its creditors. The land would then be leased back to Ruiz Coffees, allowing it to continue coffee production while retaining an option to repurchase the properties over the long term.
The company is also considering selling part of its farmland to reduce its debt burden.
On June 29, Ruiz Coffees obtained a court order suspending debt enforcement proceedings for 60 days while it negotiates with creditors. The injunction was granted by Judge Paulo Roberto Zaidan Maluf of the Regional Business Court in São José do Rio Preto, São Paulo. The case is under seal.
The group argues that a combination of debt-financed expansion, high borrowing costs, a concentration of short-term debt, tighter credit conditions for refinancing, and the long agricultural production cycle have put severe pressure on its cash flow. The situation was further exacerbated by the concentration of maturities on structured financing transactions. Among the obligations coming due are securities held by Fiagros managed by firms including Vectis, Galápagos, and Suno.
To meet the funds’ collateral requirements, the company pledged several farms through fiduciary transfers of ownership. Under Brazilian law, this type of collateral is generally excluded from court-supervised reorganization proceedings. Debt tied to Agribusiness Receivables Certificates (CRAs) alone totals about R$300 million.
Market sources estimate the group’s total debt at around R$1 billion. Ricardo Prado, Ruiz Coffees’s chief financial officer, declined to confirm the figure, saying the company’s liabilities are still being consolidated.
“The group remains in discussions with creditors holding collateral, including those involved in fiduciary transfer arrangements, seeking alternatives that preserve the business and provide a sustainable solution to its debt burden,” Prado said. According to him, the objective is to preserve operations without giving up strategic assets.
Ruiz Coffees was founded in 1930 by João Ruiz Lourenço in Bálsamo, São Paulo, with a focus on coffee production. Now managed by the family’s fourth generation, the company operates 22 farms in the municipalities of Piumhi, São Roque de Minas, Doresópolis and Urucuia, all in Minas Gerais, as well as Barreiras, Bahia. The group cultivates approximately 9,000 hectares and produces around 250,000 60-kilogram bags of coffee annually. It also operates a warehouse in Piumhi with static storage capacity for 160,000 coffee bags.
“In recent years, the group has made substantial investments in technology, infrastructure, expanding productive areas, and increasing yields to build an efficient, modern, and long-term farming operation,” Prado said.
Beginning in 2021, the company started raising capital through Fiagros to finance its expansion. “The sharp increase in interest rates significantly raised borrowing costs, putting heavy pressure on the company’s cash flow,” he said.
The situation worsened as several financial institutions and banks stopped renewing working capital and production credit lines, making it more difficult to roll over the company’s predominantly short-term debt. Prado said the reduced availability of credit at a “critical stage” of the production cycle further strained liquidity and made debt renegotiations with creditors unavoidable.
According to market sources, the group has fallen behind on payments to suppliers, and concerns intensified as Fiagro maturities approached. Creating the proposed fund could benefit creditors, who otherwise could spend years in court enforcing their collateral rights.
