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UPDATE 3-Argentine soy giant Vicentin buckles under $350 mln in debts -source

(Adds details on production from Vicentin source, second industry official)

BUENOS AIRES, Dec 5 (Reuters) - Argentine soy crushing giant Vicentin is struggling to repay over $350 million in debt and some plants are likely to halt production while it seeks relief amid an economic slowdown in the country, a source close to the firm said on Thursday.

The grains crusher, Argentina’s top exporter of processed soy last year according to government data, said it had been hurt by increasing financing costs and rising country risk, and was looking at how to meet its obligations.

“We are evaluating different alternatives and working to meet the commitments made,” the firm said, adding that it had operated continuously for 90 years.

Vicentin’s payment crisis underscores the major challenge facing the new government of President-elect Alberto Fernandez, who takes office next week looking to revive growth and raise funds to service mounting debts.

A source close to the firm, who asked not to be named, said the restructuring talks involved around $350 million in debts to supplier for raw materials and a further undisclosed but also significant amount of bank loans.

The person said the company had been hit hard by rising debt repayment costs in the country, which have soared amid fears of a default and a plunge in the value of the peso currency. The issue would likely hit activity at the firm’s plants, he added.

“In the short term it will affect the commercial operation because producers are not going to deliver products and some of the plants will likely halt production,” he said.

Vicentin exported 5.7 million tonnes of oils and byproducts last year, Argentine government data show. It was the sixth largest exporter overall of cereals, oilseeds and byproducts combined.

‘WHOLE SYSTEM SHUDDERS’

“This is a question of a particular company’s short-term financial situation,” Gustavo Idigoras, head of the Argentine agro-industrial export chamber CIARA-CEC, told Reuters.

“The crushing industry in Argentina is going through a difficult situation since October last year when the government decided to raise taxes on exports of soy products,” he said.

Another industry official said that while other firms were not in the same position as Vicentin, the debt concern did not help things in the sector. “It’s like when there is a bank that has problems; the whole system shudders a bit,” he said.

Argentina, a major grains exporter, relies on overseas sales of its crops to raise much-needed dollars. Processed soy - including soy oil and meal - is Argentina’s top export.

In a statement sent to Reuters, Vicentin said it had “been negatively affected by the backdrop of recurring crises, increased financing costs, closure of markets and the constant rise of Argentine risk.”

Argentina, which has been mired in recession for most of the last year, is grappling with interest rates above 60%, biting inflation, a painful debt pile and newly imposed currency controls to protect dwindling central bank foreign reserves.

The center-left Peronist’s new government, which will take office on Dec. 10, faces restructuring talks with creditors over around $100 billion in sovereign debt amid concerns Latin America’s No.3 economy could suffer a damaging default.

Argentina’s grains farmers have raised concerns the new government could further raise export taxes, pushing some to cut production. Grains crushers were also already facing pressure from domestic economic woes and the global trade war.

Reporting by Maximilian Heath; additional reporting by Hugh Bronstein Writing by Cassandra Garrison and Adam Jourdan; Editing by Tom Brown and Lisa Shumaker

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