JBS says IPO for U.S. as­sets will speed debt re­pay­ment

The Denver Post - - BUSINESS - By Dow Jones Newswires

são paulo » Brazil­ian meat­pack­ing gi­ant JBS SA’s shares jumped higher Tues­day af­ter the com­pany an­nounced plans for an ini­tial pub­lic of­fer­ing in the U.S. of shares in its in­ter­na­tional busi­nesses.

The com­pany un­veiled the IPO plan late Mon­day. JBS Foods In­ter­na­tional is a new sub­sidiary of JBS that groups to­gether the com­pany’s in­ter­na­tional op­er­a­tions. JBS said it would re­tain con­trol of the new unit — which in­cludes JBS USA, which is head­quar­tered in Gree­ley — af­ter the sale and will con­tinue to man­age and con­trol the com­pany’s Brazil­ian beef unit op­er­a­tions.

JBS shares rose 19 per­cent to $3.24 Tues­day. The plan will per­mit the com­pany to cut debt more quickly and give JBS ac­cess to cheaper fi­nanc­ing out­side of Brazil, cut­ting its bor­row­ing costs.

“This looks to be pos­i­tive for share­hold­ers,” said João Pe­dro Brug­ger, an econ­o­mist at in­vest­ment com­pany Leme In­ves­ti­men­tos. “The main thing is they’ll be able to ac­cess re­sources at a mo­ment when credit is re­stricted.”

Ear­lier this year, JBS an­nounced a plan to spin off its in­ter­na­tional busi­nesses into a new com­pany with head­quar­ters in Ire­land and list the new com­pany’s shares in the U.S. That plan could have turned the Ir­ish com­pany into the par­ent of the Brazil­ian com­pany.

JBS had to can­cel that plan af­ter the Brazil­ian state de­vel­op­ment bank, or BNDES, re­jected the pro­posal. BNDES owns 20.4 per­cent of the meat­packer and has a share­holder agree­ment with the hold­ing com­pany that con­trols JBS, J&F In­ves­ti­men­tos SA, that per­mits it to veto cer­tain op­er­a­tions.

The plan “is an al­ter­na­tive to the pre­vi­ous pro­posal and will bring the same ben­e­fits,” JBS CEO Wes­ley Batista said Tues­day in a con­fer­ence call.

The new plan won’t need the bank’s per­mis­sion to move ahead, he said. Mr. Batista de­clined to com­ment on the BNDES’s opin­ion of the new pro­posal.

The BNDES had no im­me­di­ate com­ment on the plan.

The com­pany plans to trans­fer its bonds to the Foods In­ter­na­tional unit, Batista said. All the pro­ceeds from the share sale will be used to speed up JBS’s plan to re­duce debt, he said.

J&F, which is the Batista fam­ily in­vest­ment hold­ing com­pany, also con­trols a pulp and pa­per com­pany called El­do­rado Brasil Celu­lose SA, that is un­der in­ves­ti­ga­tion by Brazil­ian au­thor­i­ties for al­leged fraud re­gard­ing in­vest­ments by some Brazil’s big­gest pen­sion funds.

JBS chair­man Joes­ley Batista and his brother Wes­ley have also been tar­gets of the in­ves­ti­ga­tion. They have de­nied any wrong­do­ing.

JBS isn’t a sub­ject of the probe, but the fam­ily’s le­gal is­sues are still a con­cern to some in­vestors, in­clud­ing Brug­ger.

“I pre­fer to stay away be­cause I don’t want to take that risk in case some­thing new comes out,” he said

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