(Corrects headline and paragraph 1 to make clear that syndication process is ongoing, to make clear in paragraph 5 that no offers finalized by April 15, to clarify sourcing throughout)

FILE PHOTO: The Tereos logo is displayed at a sugar beet processing plant in Origny-Sainte-Benoite, France, March 20, 2019. REUTERS/Benoit Tessier/File Photo

PARIS (Reuters) - French sugar group Tereos is still working to find additional banks to spread risk on a 250 million euro ($281 million) loan secured earlier this year, two sources familiar with the matter said.

Tereos, the world’s second-biggest sugar producer, has struggled to cope with poor market conditions since the European Union’s output quota regime ended in 2017, warning that it would post a loss for a second year in a row this season.

The debt-laden cooperative group said in February it had subscribed a 250 million euros ($281 million) loan with BNP Paribas, Natixis and Rabobank, to reimburse half of its 2020 bond one year in advance.

Tereos then launched a syndication round with about 10 banks, including other members of its banking pool and new ones, in a bid to spread the risk, the two sources said.

The call, for 50 million euros, had not secured any bids by April 15, they said.

“The group is in constant dialogue with its financial partners on various financing operations around the world. The group does not comment on these non-public discussions which, taken in isolation, may give a misleading picture of the group’s funding,” Tereos said in an email statement.

Potential bidders were put off by tough conditions for European sugar producers faced with a collapse in prices, the two sources said.

The company’s high debt level and poor results expected this year deterred one potential bidder, a third source familiar with the syndication round said.

“The problem here was significant risk. The pricing offered failed to attract banks,” said the third source.

The departure of the group’s Chief Financial Officer Olivier Casanova, responsible for presenting the syndication offer, discouraged one potential participant, the same source said.

Natixis and BNP declined to comment. Rabobank was not immediately available to comment.

DEBT MOUNTS

Tereos held net debt of 2.7 billion euros by Dec 31, up 4.5 percent on the year, putting the net debt to adjusted EBITDA ratio at 8.0 versus 4.1 a year earlier.

Concerns about Tereos’ financial health in a difficult sugar market sent yields on the group’s bonds to all time highs late last year and they have remained high since with Tereos’ June 2023 bond yielding 8.5 percent on Thursday.

The sugar maker said in February it maintained at group level a financial security of 1 billion euros as of Dec 31, 2018, including a still undrawn 225 million euros back-up facility, despite plunging profits.

A surge in output after the European Union abolished production quotas and a 40 percent slump in prices since early 2017 in an oversupplied world market has hit profits for several European firms.

Suedzucker, Europe’s largest sugar refiner, said in February it would halt sugar output at two factories of its French branch Saint Louis Sucre while French competitor Cristal Union is planning to shut another two.

Tereos has said that the group does not expect to close any plants in France.

The group is looking at opening its business to partners to boost diversification and internationalisation. The process could take two or three years, it said.