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UPDATE 1-French poultry group Doux goes into administration
June 1, 2012 / 6:00 PM / in 5 years

UPDATE 1-French poultry group Doux goes into administration

RENNES, France, June 1 (Reuters) - Debt-burdened French poultry group Doux collapsed into administration on Friday after failing to reach an agreement with bankers, putting at risk more than 3,000 jobs.

“A judicial administrator has been selected who will help the company’s management to draw up a plan to keep operating, in France, that will support jobs and the survival of the company,” Doux, one of the world’s largest poultry exporters, said in a statement.

“The Doux Group will immediately put together a plan to help strategic suppliers and breeders so that they do not experience any difficulty,” it said.

The company, one of the world’s largest poultry exporters, was placed in administration by a commercial court in Quimper, northwest France, after saying earlier on Friday that it had suspended payments to creditors.

The company has said previously its debt of 340 million euros ($420.39 million) includes 200 million euros in Brazil, where it bought subsidiary Frangosul in 1998, and 140 million euros owed to the bank Barclays.

The government, which had offered a 35 million euro cash injection for the company, blamed owner Charles Doux for ending negotiations to save the firm, but vowed to continue working to find solutions.

“Our objective today is to build a future for the company and save jobs,” Industry Minister Arnaud Montebourg said.

France’s new Socialist government is trying to prevent a feared wave of factory closures with a planned law to force companies to sell plants they want to get rid of as unemployment runs at close to a 13-year high.

Agriculture Minister Stephane Le Foll has said it would go to great lengths to prevent Doux Group’s bankruptcy and protect farmers put at risk.

In addition to employing 3,400 staff in France, Doux also has supply contracts with some 800 poultry breeders.

Doux is also the largest beneficiary of European Union farm aid in France, with 55 million euros in the year to Oct. 15, 2011, due to export subsidies.

Court protection may allow the company to try to convince Barclays to transform some or all of the poultry maker’s debt into an equity stake.

The court procedure could also enable Doux to absolve the French parent company of responsibility for its Brazilian unit’s debts. Frangosul accounted for nearly half of Doux’s sales of 1.4 billion euros in 2010.

Doux, which competes with poultry producer LDC, is 80 percent owned by Charles Doux, its founder.

The firm decided earlier this month to lease Frangosul’s assets in a renewable 10-year contract to Brazil’s JBS , the world’s top beef producer and the world’s No. 2 poultry producer, through its U.S. subsidiary Pilgrim’s Pride .

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