By Dow Jones Newswires
PUBLISHED: June 20, 2017 at 10:49 am
World’s largest meatpacker is trying to shore up its cash position following Brazilian corruption settlement signed last month
RIO DE JANEIRO — Brazil’s JBS SA, the world’s largest meatpacker, said Tuesday it aims to sell $1.8 billion of assets in a bid to shore up its cash position following a corruption settlement signed last month.
Owners of JBS told Brazilian prosecutors in April that they had made illicit payments to politicians for several years in exchange for favors, including easier access to cheaper credit. JBS’s parent company, J&F Investimentos, has agreed to pay a fine of 10.3 billion reais to settle Brazilian authorities’ investigations.
On the block are JBS’s 19.2 percent stake in Vigor Alimentos SA, its ownership interest in European poultry brand Moy Park and its Greeley-based Five Rivers Cattle Feeding business, the company said.
Not included in the sales target is the 1 billion reais JBS already raised by selling its operations in Argentina, Uruguay and Paraguay.
Shares of JBS, which grew into the world’s biggest animal-protein producer through a series of acquisitions that were partly funded with financing from state-controlled banks. were down 2.2 percent Tuesday morning at $1.88.
JBS was expected to sell assets to help maintain liquidity, and faces more problems, including efforts to boycott its products in Brazil and possible fines from U.S. authorities, according to Pedro Galdi, a São Paulo-based analyst at research firm Upside Investor.
“They might be forced to sell other assets,” Galdi said, adding that JBS’s parent company also has assets that could be sold, including lender Banco Original and pulp company Eldorado.
JBS said Tuesday it believes the plan announced is adequate and sufficient to reduce indebtedness and strengthen its financial position.
JBS also said that its products aren’t being boycotted.
This month S&P Global lowered its long-term corporate credit rating on Moy Park to B+ and kept it on CreditWatch with negative implications following a similar rating action on its parent.
According to S&P, the recent corruption investigations and leniency agreement by its holding company are “clear indication of weak governance standards.”