Virgolino de Oliveira SA is trodding what has become a well-worn path for emerging- market companies that built up capacity to meet China’s demand for commodities only to watch it crumble.
The Brazilian sugar producer missed a bond payment in February and hasn’t been able to renegotiate the terms of its debt, according to Fitch Ratings. The company couldn’t be reached for comment, but Fitch analyst Claudio Miori said it is likely to seek bankruptcy protection, joining the roughly one-fifth of Brazil’s sugar-cane mills that already are requesting relief from unpaid bills and debt payments.
“They stopped paying sugar-cane farmers,” Mr. Miori said, referring to Virgolino de Oliveira. “They stopped paying banks. They are only one notch from default.”