Mercon Coffee Group, one of the world’s largest coffee traders, has filled for bankruptcy protection in the United States due to what it defined as “exceptionally challenging operating environment”, according to a document seen by Reuters.
Mercon, which has operations in all the major producing regions including Brazil, Vietnam and Central America, said in a letter sent to clients that problems in recent years such as the logistical disruption during the pandemic, frost and drought in Brazil, sustained price volatility and rising interest rates all combined to hurt the company’s financial situation.
In the letter, signed by Mercon’s Chief Executive Oscar Sevilla, the company said that lenders have elected “not to extend credit agreements, resulting in extremely tight working capital conditions”.
Rumors of financial problems at the coffee trader, which has sales operations in Europe, Asia and the United States, circulated among some market participants in the last hours.
The comments followed news from Nicaragua that the country’s largest coffee exporter, CISA Exportadora, had closed doors. CISA was a subsidiary of Mercon until few weeks ago.
One broker, who asked not to be named due to the sensitivity of the issue, told Reuters that Mercon was in a difficult financial situation after failing to extend credit lines for its trading operations, particularly with Dutch bank Rabobank.
Rabobank confirmed Mercon was a client, but declined to comment further on the situation.
Mercon said in the letter that it will work with clients to “ensure a seamless process concerning open contracts”.
Spurce: Reuters news