Estonia, Financial Services, Foodstuff, Legislation, Markets and Companies

The due date of a loan of approximately 30 million euros from a syndicate of DNB Pank and Nordea was Oct. 20, at which time the banks gave Kruuda a grace period of three months which is now over too, Postimees said. It said the banks have not decided yet what to do next.

As at the end of December 2014 Tere had 53 million euros in debt, of which loans totaled over 36 million euros and other debt and advance payments over 17 million euros. Its sales revenue in 2014 amounted to more than 85 million euros and profit to 900,000 euros. As on Jan. 1, 2016 the company had rescheduled tax debt in the amount of 800,000 euros.

Shares of Tere are currently in a nominee account with the Estonian branch of Nordea Bank, which means that they have been pledged to the bank and cannot be sold without the bank's approval. According to unconfirmed reports the owner has offered to sell the company, but at a price way too high, Postimees said.

Representatives of the dairy sector that Postimees spoke to differed in their opinions as to who could buy Tere. One source speaking on condition of anonymity said there are three potential buyers, including one from Lithuania, who are waiting for the price to come lower.

The manager of the Epiko association of milk producers, Ullas Hunt, said Tere had overdue debt to Epiko. "There's nothing new to this – there have been [arrears] all the time, sometimes bigger, sometimes smaller," he said.

Hunt said Tere used to process as much as 300 tons of raw milk a day in its heyday, compared with well below 200 tons now. "Quite many farmers cut the amount of milk they are selling in connection with the situation that Tere's in," Hunt said. He added that Tere has a poor reputation among milk producers.

"Honestly, it's sad. Things have progressed to a very serious standoff and there's no light at the end of the tunnel for the milk seller. The wholesale price of milk is almost non-existent anyway, and when there are arrears in a situation like this the choices that the milk producer has are very narrow – you rather sell cheaper to where you get money as quickly as possible," Hunt said.

Contacted by the newspaper, Kruuda asked where Postimees was getting its information from.

"What are the adequate sources you get this misleading information from? To my mind this should be a relationship between us and the bank and the bank shouldn't have informed you. The bank should not inform anyone else either, so you can't have this information in any way."

Kruuda refused further comment.

Tere has a plant in the southern regional capital Viljandi and another in Polva in southeastern Estonia, which can produce milk powder.