SPECULATION has emerged in the financial press this morning that JBS may be sizing-up the sale of its Australian processing and feedlot assets.
The Australian newspaper has suggested that JBS, the world’s largest meat processor, embarked on plans last year to launch an initial public offering of its Australian operations through investment bank UBS, fuelling suggestions that the company could still be weighing a possible sale or float of the suite of Australian red meat industry assets, said to be worth ‘at least $2 billion.’
The Australian said UBS spent time working on the plans for an Australian float, but they were placed on hold, potentially due to the company selling assets in other jurisdictions to appease lenders.
Beef Central this morning asked JBS Australia management for a comment on The Australian’s story.
“No substance, and mis-informed,” was the company’s economical response.
The North American division of JBS, which manages operations in the US, Canada and Australia, recently completed the sale of its Five Rivers feedlot division, the largest feedlot operator in the US.
In June last year JBS announced plans to sell A$2.3 billion worth of assets, including Five Rivers Cattle Feeding in North America, a stake in Brazilian dairy company Vigor Alimentos and Irish poultry producer Moy Park.
JBS last year vigorously denied that any part of the company’s Australian operations were being considered for sale, to reduce debt.
“Despite previous indications from head office that the company’s Australian arm was not for sale, plans may secretly still be afoot,” The Australian insisted.
JBS Australia operates a network of five feedlots in Queensland and New South Wales, with one time capacity of around 130,000 head, making it easily the largest lotfeeding business in Australia. The company’s 11 beef and sheepmeat processing plants stretch from Townsville in North Queensland through to NSW, Victoria, Tasmania and South Australia.
Analysts have remained concerned about the debt levels of JBS even after the group said in November that it had reduced its net debt to 45.5 billion reais (US$17.6 billion).
Batista brothers remain in jail
Meanwhile JBS’s major shareholders, brothers Joesley and Wesley Batista remain incarcerated in Brazil, five months after handing themselves in to authorities over an epic corruption scandal.
The Batistas were arrested last September for insider trading, after an investigation found they had used information from their own plea deals to profit with foreign exchange and share transactions. Earlier they admitted to bribing almost 2000 Brazilian officials and politicians, in the wake of the ‘Weak Flesh’ food safety investigation.
Now the brothers’ J&F Investimentos, the controlling shareholder in JBS SA, is trying to renegotiate its leniency agreement and is considering agreeing to a confession of insider trading by the Batistas, according to a Reuters report.
Last year’s initial leniency agreement agreed to last May included a record US$3.21 billion fine, paid in installments over 25 years, for corrupt acts committed by companies controlled by J&F. However the plea deals were suspended after the brothers were accused of omitting vital information.
Representatives for J&F and prosecutors have held informal talks to discuss the terms of a possible renegotiation of the plea deal which would see the Batistas released. The new deal would involve additional fines, a Reuters report suggested.