MercoPress. South Atlantic News Agency
Government support for Brazil’s meat industry, one of the world’s main exporters
Soaring price of cattle is distorting the beef industry’s cost structure The world’s largest beef producer, Brazil’s JBS announced its board agreed to boost its capital by as much as 3.48 billion Real (2.15 billion US dollars) through a private placement with Brazil’s state economic and social development bank.
BNDES, as the bank is known, will convert into stock the bonds that it bought from Sao Paulo-based JBS in December 2009 to help it finance takeovers of Pilgrim’s Pride Corp. and Bertin SA.
At the time, JBS said the bonds would be convertible into shares of its US unit after an initial public offering. JBS in January cancelled the IPO after postponing the sale twice.
“This operation is an important step for the company because it eliminates the uncertainties about the mandatory public share offering of JBS USA Holdings Inc.,” the company said in a regulatory filing.
Another major Brazilian meatpacker Marfrig Alimentos S/A said this week it turned a net profit in the first quarter, as tax reimbursements offset a small operating loss. Marfrig reported first-quarter net profit of 25.2 million Brazilian Real (15.3 million USD), compared with a net loss of 52 million Real in the first quarter of 2010.
The company's operating loss shrank to 20 million Real in the first three months of 2011 from 100 million Real a year earlier, as a stronger local currency helped to soften the impact of a 70% rise in operating expenses. The 45.2 million Real that Marfrig received from the Brazilian government in tax refunds was enough to nudge its bottom line into the black.
Marfrig's net sales rose 64% to 5.25 billion Real in the quarter amid higher commodities prices and ramped-up production of beef and chicken. But elevated commodities prices function as a double-edged sword for Marfrig, which purchases animals as well as feed from suppliers. The company's cost of sales surged 71% to 4.52 billion Real.
Net debt rose to 6.14 billion Real from 5.35 billion Real at the end of the fourth quarter.
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May 19th, 2011 - 08:04 pm 0can you translate this Mercopress piece on JBS & BNDES, bonds & stock & compulsory (?) public offering. It makes little sense to me!
Who buys the stock? World public? BNDES? BNDES=Brasilian Government? Do stocks translate into a share of the company?
So much knowledge ;-) but none applicable to this case. Help needed.
G.
http://economia.ig.com.br/empresas/comercioservicos/bndes+troca+divida+por+acoes+e+passsa+a+deter+31+do+jbs/n1596964624109.html
May 20th, 2011 - 06:00 am 0At the expense of other shareholders, Brazil's national development bank BNDES will increase its stake in JBS’s South American operations by converting a massive loan – debentures worth 3.48 billion reais - into equity, thus increasing its stake in JBS from 17% to 31%*.
May 20th, 2011 - 12:38 pm 0The controlling Batista family will see its share in JBS drop from 55% to 47%. Batista said. “BNDES has a seat on our board, but it will not change its influence in JBS.”
*Thus, it seems to me, BNDS have swapped repayment of debt for buying into a major stake in the company and a permanent ‘doubling’ of returns from the profitability of the company’s South American operations. The state will then own 31% of the ‘private’ company.
I hope I have got this right.
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