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Under Pressure from Creditors, JBS Corporation Sells Mercosur Operations

06/07/2017 - 09h26

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RENATA AGOSTINI
RAQUEL LANDIM
FROM SÃO PAULO

Embroiled in an acute image crisis and pressured by creditor banks, JBS Corporation closed the sale of its operation in Argentina, Uruguay and Paraguay to rival Minerva Corporation for US$ 300 million.

The agreement represents the virtual exit of JBS from these markets, since the corporation will maintain only a leather business in Argentina and Uruguay.

JBS declared that it will use the funds from the sale to reduce outstanding debt. At the end of March, the company's net debt position (difference between cash on hand and outstanding short-term debt) was close to R$ 48 billion (US$ 14,6 billion).

This amount concerns analysts that follow the corporation's financials. They had been counting on the listing of the company in US financial markets to bring the balance down.

With the deal, Minerva will acquire the slaughter, boning, industrialization, processing and commercialization operations in the three countries together with Uruguay, a business in which the Batista brothers had invested US$ 360 million.

Pedro Ladeira/Folhapress
Brazil's meatpacking giant JBS
Brazil's meatpacking giant JBS

MUSCULAR
The second largest meat packer in the country, Minerva had shown interest in growing its presence in Mercosur and had looked at different opportunities in the Argentine market - it already has business units in Paraguay and Uruguay. With the acquisition, it reinforces its position in international markets.

With the announcement, JBS shares rose 8,4% on the news while those of Minerva increased 5,6%.

Translated by LLOYD HARDER

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