Risks related to the business and industries
- Unpredictable weather conditions, pest infestations and diseases may have an adverse impact on agricultural production and may reduce the volume and sucrose content of sugarcane that Adecoagro can cultivate and purchase in a given harvest.
- Fluctuation in market prices for their products could adversely affect its financial condition and results of operations.
- Ethanol prices are correlated to the price of sugar and are becoming closely correlated to the price of oil, so that a decline in the price of sugar will adversely affect both Adecoaogro´s ethanol and sugar businesses, and a decline in the price of oil may adversely affect their ethanol business.
- The expansion of Adecoagro´s business through acquisitions poses risks that may reduce the benefits they anticipate from these transactions.
- Adverse conditions may create delays in or the suspension of the construction of Adecoaogro´s Ivinhema mill and/or significantly increase the amount of its expected investments.
- A significant increase in the price of raw materials Adecoagro uses in their operations, or the shortage of such raw materials, could adversely affect their results of operations.
- Increased energy prices and frequent interruptions of energy supply could adversely affect Adecoagro´s business.
- Adecoagro depends on international trade and economic and other conditions in key export markets for their products.
- Adecoaogro´s business is seasonal, and its revenues may fluctuate significantly depending on the growing cycle of their crops.
- Adecoaogro´s dairy and beef cattle are vulnerable to diseases.
- Adecoaogro´s current insurance coverage may not be sufficient to cover their potential losses.
- Adecoaogro may be exposed to material losses due to volatile prices of agricultural products since they do not fully hedge their agricultural products price risk. Adecoaogro also may not be able to realize gains related to price appreciation for hedged positions.
- A reduction in market demand for ethanol or a change in governmental policies reducing the amount of ethanol required to be added to gasoline may adversely affect Adecoaogro´s business.
- Growth in the sale and distribution of ethanol depends in part on infrastructure improvements, which may not occur on a timely basis, if at all.
- Adecoagro may be harmed by competition from alternative fuels, products and production methods.
- A substantial portion of Adecoagro´s assets is farmland that is highly illiquid.
- Adecoagro leases or has agriculture partnerships relating to a significant portion of their sugarcane plantations.
- Adecoaogro may be subject to labor disputes from time to time that may adversely affect them.
- Adecoaogro is subject to extensive environmental regulation, and concerns regarding climate change may subject them to even stricter environmental regulations.
- Some of the agricultural commodities and food products that Adecoaogro produces contain genetically modified organisms.
- If Adecoaogro products become contaminated, they may be subject to product liability claims, product recalls and restrictions on exports that would adversely affect their business.
- Adecoagro may be adversely affected by unfavorable outcomes in pending legal proceedings.
- Adecoaogro´s principal shareholders have the ability to direct its business and affairs, and their interests could conflict with yours.
- Adecoaogro´s internal controls over financial reporting may not be effective and their independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on its business and reputation.
- The historical and pro forma financial information in this prospectus may not accurately predict Adecoaogro´s costs of operations in the future.
- IFRS accounting standards require them to make numerous estimates in the compilation and preparation of their financial results and limit the comparability of its financial statements to similar issuers using U.S. GAAP.
- Proposed new IFRS standards and amendments may have a significant effect on its financial statements.
- Adecoagro has a history of operating losses and negative cash flows, which may continue and adversely affect its ability to meet their business and growth objectives.
- Certain of their subsidiaries have substantial indebtedness which could impair their financial condition and decrease the amount of dividends Adecoagro receives.
- The terms of the indebtedness of, and past breaches of financial ratio covenants by, certain of their subsidiaries impose significant restrictions on their operating and financial flexibility.
- Fluctuations in interest rates could have a significant impact on Adecoaogro´s results of operations, indebtedness and cash flow.
- Adecoagro may not be able to renew its credit lines when they mature, depriving them of needed liquidity.
- There is a risk that Adecoagro could be treated as a U.S. domestic corporation for U.S. federal income tax purposes, which could materially increase their U.S. federal income tax liability and subject any dividends they pay to U.S. federal withholding tax.
Risks associated with the countries in which Adecoagro operates
- Adecoagro operates its business in emerging markets. Their results of operations and financial condition are dependent upon economic conditions in those countries in which they operate, and any decline in economic conditions could harm their results of operations or financial condition.
- The economies of the countries in which Adecoagro operates may be adversely affected by the deterioration of other global markets.
- Governments have a high degree of influence in the economies in which Adecoagro operates, which could adversely affect our results of operations or financial condition.
- Currency exchange rate fluctuations relative to the U.S. dollar in the countries in which Adecoagro operates their businesses may adversely impact its results of operations and financial condition.
- Inflation in some of the countries in which we operate, along with governmental measures to combat inflation, may have a significant negative effect on the economies of those countries and, as a result, on its financial condition and results of operations.
- Disruption of transportation and logistics services or insufficient investment in public infrastructure could adversely affect Adecoagro´s operating results.
Risks Related to Argentina
- Argentine economic and political conditions and perceptions of these conditions in the international market may have a direct impact on Adecoagro´s business and its access to international capital and debt markets, and could adversely affect their results of operations and financial condition.
- The economy of Argentina may be affected by its government’s limited access to financing from international markets.
- The lack of financing for Argentine companies may have an adverse effect on the results of Adecoagro´s operations in Argentina and on the market price of its common shares.
- Government intervention in Argentina may have a direct impact on Adecoaogro´s prices and sales.
- Government measures to preempt or respond to social unrest may adversely affect the Argentine economy and Adecoagro´s business.
- Disputes between the Argentine government and the agricultural sector may adversely affect the Argentine economy and Adecoaogro´s business.
- The Argentine government may order salary increases to be paid to employees in the private sector, which would increase Adecoaogro´s operating costs.
- An increase in export duties and controls may have an adverse impact on Adecoaogro´s sales.
- Exchange controls could restrict the inflow and outflow of funds in Argentina.
Risks Related to Brazil
- Brazilian economic and political conditions and perceptions of these conditions in international markets have a direct impact on Adecoagro´s business and their access to international capital and debt markets and could adversely affect their results of operations and financial condition.
- Changes in Brazilian tax laws may increase Adecoagro´s tax burden.
- Widespread corruption and fraud relating to ownership of real estate may adversely affect their business, especially its land transformation business.
- Social movements and the possibility of expropriation may affect the normal use of, damage, or deprive them of the use of or fair value of, their properties.
- Recent changes in Brazilian rules concerning foreign investment in rural properties may adversely affect Adecoaogro´s investments.
- The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy.
- Adecoagro´s business in Brazil is subject to governmental regulation.
- Government laws and regulations in Brazil governing the burning of sugarcane could have a material adverse impact on its business or financial performance.
Risks related to the Offering
- There is no existing market for their shares, and Adecoagro does not know whether one will develop to provide you with adequate liquidity. If their stock price fluctuates after this offering, you could lose a significant part of your investment.
- The initial public offering price per common share is substantially higher than Adecoagro´s net tangible book value per common share immediately after the offering, and you will incur immediate and substantial dilution.
- Sales of substantial amounts of their shares in the public market, or the perception that these sales may occur, could cause the market price of its shares to decline.
- Transformation into a public company may increase Adecoagro´s costs and disrupt the regular operations of its business.
- As a foreign private issuer, Adecoagro is permitted to, and they will, rely on exemptions from certain NYSE corporate governance standards applicable to U.S. issuers, including the requirement that a majority of an issuer’s directors consist of independent directors. This may afford less protection to holders of their common shares.
Risks Related to Investment in a Luxembourg Company
- Adecoagro is a Luxembourg corporation (“société anonyme”) and it may be difficult for you to obtain or enforce judgments against them or its executive officers and directors in the United States.
- You may have more difficulty protecting your interests than you would as a shareholder of a U.S. corporation.
- You may not be able to participate in equity offerings, and you may not receive any value for rights that Adecoagro may grant.