Thanks nirav for the detailed write up.
For the immediate short term 5 Sep remains a crucial date when the bids for the Brazilian co auction open up. If that is delayed or fails, then there could be a lot of disappointment. Two reasons why someone would be interested in buying a big sugar facility in Brazil are, first the upswing in sugar cycle and secondly the recent appreciation of Brazilian currency wrt USD. Plus such firesale might provide assets on the cheap.
Brazilian lenders have agreed to take a haircut of upto 70% as a part of restructuring. (as per Narendra Murkumbi interview). And all the proceeds go to the lenders and the Brazilian operations become debt free.
The other more interesting part of the thesis is of a longer term in nature. With Wilmar putting in a lot of money, post all the restructuring and conversion of instruments, it will end up with 38% stake in the company. If this happens then the company can be viewed in a different light with a very strong promoter at the helm.
The continuation of the upswing in sugar cycle remains an integral part of the thesis.
In the past, change of management has provided good opportunities to pick up winners e.g Spicejet, USL etc. In each case there were a different set of problems faced by the companies but once the managements changed things improved.
And if the whole restructuring suceeds, there can be a few more things which could also fall in place for the co bcos usually when things go wrong, there are multiple things which go wrong and reverse is also true. As per the fy 16 AR, renuka is one of the biggest players globally in sugar sector so if things turn there could be a big swing.
disc: invested as an opportunistic bet.