Israeli financial newspaper Globes has reported that fresh produce exporter Agrexco is proposing to convert 35 per cent of the debt it currently owes bondholders into equity shareholdings equal to 10 per cent of the business.
Agrexco is understood to owe around €32m to a number of investors to whom it issued bonds four years ago, with auditors apparently concerned about the group's future potential earning capacity.
Reported heavy losses made by the company, totalling €33m during the past year on revenues of around €490m, and its ability to repay its debts were top of the agenda at a meeting between company officials and bondholders on Thursday 23 June 2011.
As well as the proposed equity issue, Agrexco is also understood to have proposed a rescheduling of its debt repayments in return for a partial cash repayment and a capital injection made by its major shareholder, the Israeli government.
It was also revealed in the Globes report that Agrexco has a deficit of €13m on shareholders' equity and a €49m working capital deficit.
"Its financial liabilities stand at €83m, and it has failed to meet financial covenants in its bond trust deed," the article added.
Apart from its bondholder debts, Agrexco also owes money to banks and suppliers in Israel, as well as a "large debt" to a French bank, Globes reported.
The newspaper has also learned that Agrexco owes around €60m to Ofer Shipping as part of a deal to lease two reefer vessels that were designed, ordered and built for Agrexco with finance from a German finance group.