MercoPress. South Atlantic News Agency

Brazilian government comes to the rescue of giant meat corporation JBS SA

The Brazilian government development bank now holds 30.4% of JBS stock

Brazilian meat giant JBS S.A. has announced that BNDES (Brazilian Development Bank) converted a large amount of JBS debt into equity, boosting the bank’s shareholdings in the company to 30.4% from 17% previously.

“This capitalization does not in any way alter the controlling structure nor the administration of the company” Investor Relations Officer Jeremiah O’Callaghan said in a note to investors on the JBS S.A. website.

The move will reduce Batista family holdings (through its holding company FB Participacoes) to 47% from nearly 55%, according to Dow Jones.

The announcement follows JBS second-quarter net loss of 180.8 million Real (114 million dollars), reversing a year-ago gain as US performance suffered. The company, considered the world’s biggest beef producer, posted net income of 3.7 billion Real in the second quarter in 2010, with net income of 147 million Real in the first quarter of this year, according to a regulatory filing.

The company was hurt by US chicken producer Pilgrim's Pride Corp, controlled by JBS, which was affected by high grain prices, the company said. JBS also noted the weak performance of its beef unit in the United States in the quarter.

Analysts had warned that JBS leveraged itself heavily during a buying spree over the past five years and if global meat prices fall the company could face problems servicing its debt given tight profit margins seen recently.