Compania de Alimentos Fargo appeal ruling throws wrench in Argentine concurso proceedings

By Caroline Salls

Pittsburgh, May 14 -Compania de Alimentos Fargo SA has encountered a roadblock in its restructuring process after a judge granted a trust lawyer the right to appeal a ruling that allowed the company and Panificacion Argentina SA to move forward with their Argentine concurso proceedings and defer resolution of a creditor vote dispute, according to a news release.

As previously reported, Compania de Alimentos Fargo and its shareholders reached a support agreement with the company's primary debtholders in connection with negotiations on the terms of a restructuring plan in November.

The primary bondholders that have agreed to support Fargo's Argentine restructuring include Rainbow Global High Yield, the Argo Capital Investors Fund SPC, Argo Global Special Situations Fund Segregated Portfolio and The Argo Fund Ltd.

Panificacion Argentina and Sanalp 2005 SL are also parties to the support agreement.

Under the support agreement, Sanalp will acquire all of the "quirografario" loans, or direct loans in Panificacion Argentina's bankruptcy proceedings, subject to Fargo obtaining the consent of holders of 99% of the loans.

In addition, if the required consents are not obtained, Fargo will either issue bonds to the creditors in exchange for debt incurred under a Sanalp 2005 call option and put option on the bonds or Sanalp will acquire all of the quirografario loans in Fargo's concurso proceeding, at Fargo's option.

Under the ruling being appealed by the trust lawyer, the loan creditors vote computation resolution was postponed until after the completion of the concurso proceedings.

Fargo said the trust lawyer appeal ruling also suspends its exclusive period, impeding the company's ability to pay the loan creditors.

According to the release, Fargo is investigating why the trust lawyer is trying to hinder the concurso proceedings, especially since holders of more than 80% of Fargo's notes agreed to support the restructuring and the impact the appeal will have on creditors.

Compania de Alimentos Fargo is a Buenos Aires-based producer and distributor of packaged bread and bakery products in Argentina. Its Chapter 11 case was dismissed by the U.S. Bankruptcy Court for the Southern District of New York on Oct. 12, 2007.

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