San Miguel Seeks $50 Million with New Plants to Advance Its Conversion
With its overseas factories, San Miguel increased its capacity by 60% and solidified its position as the world's largest industrial lemon processor. Here's how the funds from two new bonds, to be launched next week, will be used.
Juan Manuel Compte, Chief Business Editor
Cronista Comercial, June 19, 2024
With its new factories in Uruguay and South Africa inaugurated last month, the citrus company San Miguel is now seeking $50 million. The company, controlled by the Miguens Bemberg and Otero Monsegur families, will use these funds as a bridge to continue financing its strategic reorientation until these plants start generating the necessary cash flow to repay the investment made in them.
SAMI, as it is known on the stock market, will issue two new bonds next week. One will be dollar-linked and the other will be a hard dollar bond, quoted on the MEP market. The bonds will have a duration of two years. "This is the same period during which the two plants will reach their full capacity," explains Pablo Plá, the CEO of the citrus company.
Based in Tucumán, San Miguel is the leading producer and marketer of lemons in the southern hemisphere. In December, it will celebrate its 70th anniversary. In 2022, it underwent a "strategic redirection," in Plá's words: it moved away from its historical core of fresh fruit to focus on the industrial market, which has higher added value and lower volatility than the commodity market. It sold this operation, which included assets in Peru and South Africa, to the Catalan group Citri & Co.
Furthermore, to place its future production of juices and other lemon derivatives, the Tucumán-based company negotiated long-term supply contracts. This secured production volumes and income flow for the capacity increase of its Famaillá plant in Tucumán, and the two new facilities to be built abroad. "Geographical diversification is also an added value: it gives us the flexibility to ensure supply and mitigate climatic, logistical, and geopolitical impacts," explains the CEO. Today, San Miguel has 200 clients in more than 50 countries.
The Paysandú plant in Uruguay required $31 million and was partially financed with a loan from the Bank of the Oriental Republic of Uruguay (BROU). The South African plant cost $22 million, of which a local partner, American Pioneer Group (APG), injected $13 million. Each has a capacity of 100,000 tons annually. With the 270,000 tons from Tucumán, San Miguel increased its potential by 60% to 470,000 tons. This also consolidated it as the world's largest industrial lemon processor: its share grew from 16% to 20% of global milling.
"The inauguration of these plants meant continuing the process started in recent years, within the framework of the project aimed at reconfiguring the business strategy in the long term, increasing global production capacity, with a high added value focus on developing industrial projects based on natural ingredients," the company celebrated in a note sent days ago to the Buenos Aires Stock Exchange, where its shares are traded.
"This, together with its historically located industrial plant in Famaillá, Tucumán province, will allow the San Miguel Group to strengthen its financial strategy and long-term global leadership as an industrial lemon processor, from its mentioned origins in Argentina, Uruguay, and South Africa," it added.
Also in June, San Miguel closed a capital increase, its first since 2017. The follow-on raised $66 million, of which $45.7 million were injected by its shareholders—they converted a loan given last year into new shares—raised $9.6 million from minority shareholders, and the rest was subscribed by APG, its South African partner, which also wanted to join the global project.
