Argentine soy crushing giant Vicentin has halted most of its operations as the company battles to restructure its debt after defaulting in December, three industry sources with direct knowledge of the situation told Reuters. The production issues affect crushing at Vicentin’s wholly owned processing plants and threaten to ripple through global markets and hit domestic supply of edible oils. Vicentin, founded in 1929, is Argentina’s top exporter of processed soy and an iconic brand in the South American grains powerhouse. Argentina is the world’s No. 1 supplier of soymeal livestock feed and soyoil.

“Vicentin is presently not producing. They are not crushing,” one of the sources close to the company said, adding that there was a blackout of detailed information about the debt restructuring talks. “Those negotiations are being conducted by very few people at the highest level,” said the source, who asked not to be named due to the sensitivity of the matter.

The Argentine firm has a joint venture with Glencore Plc called Renova, which has a major crushing plant in Argentina’s Santa Fe province. A second source close to Vicentin said Renova remained operational while output at the firm’s two wholly owned crushing facilities had been suspended.

Vicentin has not explained how its debt situation became so dire. But financing costs are a well-documented problem in Argentina, where the benchmark interest rate is a whopping 63%.

Vicentin has around $350 million in outstanding payments to suppliers, while financing deals with local and international banks add up to well over $1 billion.

Argentina’s Banco de la Nacion is a major backer. Dutch development bank FMO, the World Bank’s International Finance Corporation, Rabobank, ING Group and others have lent funds to the firm.

Vicentin’s financial meltdown underscores the challenge facing Argentine President Alberto Fernandez, who took office last month, as he looks to revive growth, calm rampant inflation and revamp about $100 billion in sovereign debt.

In a statement, Vicentin said it was drawing up a “viable business and restructuring plan that will require the greatest flexibility and predisposition of all parties.” The statement said the company had failed to make debt payments on Dec. 4, without detailing the amount. The company shipped 4.4 million tonnes of soybean meal and 929,000 tonnes of soyoil last year and is a major domestic supplier of cooking oil. Vicentin’s production halt has been bruising for local grains brokers and logistics firms. REUTERS