ADM says close to leasing Brazil co-op grain silos

SAO PAULO, March 10 (Reuters) - The Brazilian subsidiary of U.S. grain processor Archer Daniels Midland Co (ADM.N) said on Tuesday it is about to close a deal to lease 17 silos of an inoperative grain cooperative in Mato Grosso do Sul.

ADM is one of the main creditors of the Cooagri cooperative. The deal still depends on the approval of other creditors, but talks are moving forward "in a significant way for the deal to be reached," it said.

"ADM informs that it has conditions to start its operations quickly after talks are concluded," it said in a statement.

The deal, to reactivate and lease Cooagri's 17 grain warehouses in the state, was approved by the cooperative's associates on Feb. 13.

A new company would be created and the cooperative's remaining creditors would be shareholders in the new company.

Talks are being conducted by Merrill Lynch investment bank and CCAB Projetos e Solucoes Financeiras.

ADM will retain the right to buy the assets after the lease period expires. According to the Brazilian media, the lease period is for three years, but the company did not confirm the information.

Cooagri, with its 4,000 associates, started having problems in mid-2008 after credit lines dried up, while the cooperative was in the middle of leveraged expansion plans. Cooagri has outstanding debts of roughly 240 million reais ($107 million), according to the local media.

ADM, a leader in corn-based ethanol production in the United States, entered Brazil's cane industry in 2008 by announcing plans to build two cane-based ethanol and sugar mills, in Goias and Minas Gerais states.

It operates several grain crushing plants, storage units and port facilities in Brazil, processing around 3.5 million tonnes of soybeans per year.

(Reporting by Inae Riveras; Editing by Marguerita Choy)