Fyffes gets over €180m equity injection from Japanese parent

Funds used to clear borrowings from the Sumitomo group in a debt-for-equity swap

Fyffes will not appeal a decision by the UK’s Ethical Trading Initiative at the end of March to expel it as a member following a dispute over workers’ rights at its Honduras melon farming business. File photograph: Bloomberg

Fyffes will not appeal a decision by the UK’s Ethical Trading Initiative at the end of March to expel it as a member following a dispute over workers’ rights at its Honduras melon farming business. File photograph: Bloomberg

 

Tropical fruits group Fyffes has received an almost €183 million equity injection from its Japanese owner Sumitomo to replace parental borrowings and lower its overall debt level.

The Tokyo-based group bought Fyffes two years ago in a €751 million deal, ending the company’s 35 years on the Irish stock market.

Documents lodged with the Companies Registration Office in recent weeks show Fyffe’s immediate parent, Summit Fresh Produce Ltd, bought €182.7 million of new shares in the bananas-to-mushrooms group at the end of May. The money was routed by Sumitomo through another holding company in the Cayman Islands, other filings show.

It is understood that the fresh funds have been used to clear Fyffes borrowings from the Sumitomo group in a debt-for-equity swap, after its total debt level increased by about €100 million last year from €185 million at the end of 2017.

Accounts for 2018 have not yet been published and it is unclear what led to the overall debt increase. A spokesman for the company declined to comment on the matter.

Fyffes’ chairman David McCann, who has remained in the role since the takeover, is the grandson of Charles McCann, who laid the foundations for the group when he opened a fruit and vegetable shop in Dundalk in 1902. The Irish company ventured beyond bananas, melons and pineapples when it bought two Canadian mushroom companies in 2016.

Treatment of workers

Meanwhile, the spokesman said that Fyffes has decided not to appeal a decision by the UK government-sponsored Ethical Trading Initiative (ETI) at the end of March to expel it as a member, following a drawn-out dispute over workers’ rights at its Honduras melon farming business.

The issue had centred on the treatment of workers at the Fyffes Suragroh melon unit in the central American country and the right of farm workers to be represented by a union of their choice.

The ETI said in March that despite its “best efforts” it was unable to have problems with Fyffes addressed through mediation.

Fyffes said at the time that it had been told by the ETI that enough action had been taken to address two of three issues that had been at the core of original concerns.

However, it said it disagreed with the ETI’s assessment of the third issue, around freedom of association, and that one of the two unions it had been asked to deal with was not legally recognised in Honduras.

Fyffes, which had been a member of ETI since 2002, had the right to appeal the organisation’s decision within 28 days of the March ruling.