The Madrid-based company – renowned for having debts of more than 300 million euros – risked closure after most of the company’s 1,700 employees rejected its ‘competitive plan’ to cut costs.
Its plan to improve competitiveness – revealed in November to “reduce excess fixed costs” – involved closing a biscuit factory in Venta de Baños in the province of Palencia and relocating the 197 workers to another factory in Castilla y Leon. It also included a wage freeze for employees.
The plan was a formal condition for private equity investors Davidson Kempner Capital Management of the United States and Afendis Capital Management of Turkey to take a majority stake in the company, so that in the absence of an agreement, the investors pulled out of the deal.
This forced Cerealto Siro to stop production in order to stop going into debt and “Let’s only manage cash with the stock of finished product we have. The shutdown covered both the company’s domestic and foreign operations in Portugal, Italy, the UK, the US and Mexico. In 2019, Bakery Iberian Investments – a subsidiary of the Mexican bakery giant Grupo Bimbo – bought the Paterna de Cerealto Siro factory in Valencia.
Help from the government
Earlier this month, the country’s Ministry of Industry, Trade and Tourism stepped in with a cash investment of 100 million euros to keep the beleaguered business afloat, which obviously secures jobs. future of the company’s workforce.
Cerealto has also agreed to keep the Venta de Baños facility open for at least two years; filed an incentive after four years for workers at factories that maintained 2021 production levels to recover; and added 2% to the agreed wage freeze for the duration of the competitiveness plan.
“It offers an opportunity for the industrial future of the company and guarantees future employment for 1,700 families”,said Industry Minister Reyes Maroto.
“In addition, this agreement is a good example of commitment to the opportunities and future of rural Spain, in this case Castile and León, one of the priorities of the Spanish government.”
The government intervention also brought Afendis Capital Management and Davidson Kempner back to the table, who both signed a definitive agreement with Juan Manuel González Serna (founder and majority shareholder of Cerealto) to transfer shares and clean up the company’s balance sheet. .
“Today a new stage of future and growth opens at Cerealto Siro Foods which allows business continuity, a priority that we have always defended”,said González-Serna.
“My eternal thanks to all the collaborators who made this possible, to the customers and suppliers who followed by supporting us and to the institutions who got involved and facilitated the closing of the operation.”
“We are fully convinced of the strategic potential of Cerealto Siro Foods”,added Dr. Cem Karakas, Executive Chairman of Cerealto Siro.
“Cerealto Siro has very strong relationships with its global customers and is on its way to becoming the primary supplier to retailers and branded manufacturers around the world. We will dedicate our resources and industry experience to radically change the company’s competitiveness and leverage its core strengths of dedicated human resources and R&D capabilities.
Afendis Capital Management is a specialist investor in the European food and pharmaceutical sectors.
Davidson Kempner Capital Management LP is a global investment management firm with over $38 billion in assets under management and over 450 employees.