Panrico Renegotiates Tenancy Agreements With a London Fund

7/07/2014 – Expansion

Spanish food group Panrico has taken the next step in its restructuring process and managed to cut in on leasing costs of its production plants through an agreement with European Real Estate Investment Trust owning the properties.

Annual rent of factories in Cordoba, Madrid and Valladolid is going to be reduced from €3.28 million to €2.46 million, by 25%, still this year.

The rental expenses will rise to the previous levels in 2018, when the situation of the Donuts manufacturer improves.

Panrico is controlled by U.S. investment fund Oaktree. It shall deposit a 14-month lease to meet the contract terms and conditions. Moreover, the agreement assumes purchase of its own plant in Murcia for €3.4 million from the same fund. Possibly, the food company will sell it in the future.

The cut in rental costs forms a part of overall expense reduction plan of Panrico. At the end of 2013, the firm filed for a collective dismissal, firing 745 employees in Spain (133 in Catalonia solely) and another 300 workers from its distribution network. The measures allowed the group to save €500 million.

Last year, Panrico earned €382 million and lost €79 million.

 

Original article: Expansión (by R. Casado & C. Fontigivell)

Translation: AURA REE

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