The Madrid-headquartered company – reputed to have had debts of over €300m – was facing closure after most of the company’s 1,700-strong workforce rejected its cost-saving ‘competitive plan’.
Its Competitive Improvement Plan – revealed in November to ‘reduce excess fixed costs’ – involved the closure of a biscuit facility in Venta de Baños in Palencia province and the relocation of the 197 workers to another factory in Castilla y León. It also included an employee pay freeze.
The plan was a formal condition of private equity investors Davidson Kempner Capital Management from the US and Turkey’s Afendis Capital Management taking a majority stake in the business, so when an agreement was not reached, the investors walked away from the deal.
This forced Cerealto Siro to halt production in order to stop racking up debt and “only manage the cash flow with the stock of finished product we have.” The stoppage 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 Mexican bakery giant Grupo Bimbo – purchased Cerealto Siro’s Paterna plant in Valencia.
Earlier this month, the country’s Ministry of Industry, Commerce and Tourism came to the fore with a €100m cash investment to keep the beleaguered company afloat, which obviously guarantees future employment of the company’s workforce.
Cerealto has also agreed to keep the Venta de Baños facility open for at least two years; tabled an incentive after four years for workers at plants that have maintained 2021 production levels to recover; and added 2% to the salary freeze agreed for the period of the competitiveness plan.
“It provides an opportunity for an industrial future for the company and guarantees a future job 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 Castilla y León, one of the priorities of the government of Spain.”
The government intervention also brought Afendis Capital Management and Davidson Kempner back to the table, both of which have now signed a definitive agreement with Juan Manuel González Serna (Cerealto’s founder and majority shareholder) to transfer shares and clean up the company’s balance sheet.
“Today a new stage of future and growth opens in Cerealto Siro Foods that allows the continuity of the business, a priority that we have always defended,” said González-Serna.
“My eternal thanks to all the collaborators who have made it possible, to the clients and suppliers who have followed supporting us and the institutions that have been involved and have facilitated the closing of the operation.”
“We are fully convinced about the strategic potential of Cerealto Siro Foods,” added Dr Cem Karakas, executive chair of Cerealto Siro.
“Cerealto Siro has very strong global customer relationships and is poised to become the preeminent supplier for retailers and branded manufacturers worldwide. We will dedicate our resources and industry experience to step change the company’s competitiveness and to build on its primary 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 more than $38bn in assets under management and more than 450 employees.