BRF sells factories abroad to Tyson Foods for $ 340 million

BRF signed a $ 340 million ($ 1.258 billion) buy-out of Tyson Foods operations in Thailand and Europe on Thursday, considering the closing of the US currency yesterday.

The transaction was announced at 5 pm by Tyson. In practice, the sale of the operations in Europe and Thailand (four factories in the Asian country, one in the Netherlands and one in the United Kingdom) represents a setback for BRF, which failed to achieve the R $ 3 billion target for the sale of assets – adding working capital measures, the monetization plan is R $ 5 billion.

Before divesting the assets from Tyson, the company had already obtained a little more than R $ 500 million from the sale of operations in Argentina and from a hamburger factory in Brazil. According to Valor, one of the points that made the negotiations between Tyson and BRF more difficult was the impasse surrounding the departure of the United Kingdom from the European Union (EU). Tyson bargained for the price of Brexit. Analysts believe that UK poultry companies can be seriously affected. In the case of BRF assets, the UK had relevance.

In addition to a factory in the region, the Thai operation is intrinsically linked to that European country. Boiled chicken produced by Thai-controlled Golden Foods Siam, controlled by BRF, is almost fully exported to British territory through the distributor Universal Meats, also controlled by BRF.

BRF bought Golden Foods and Universal Meats in early 2016, paying $ 410 million – $ 360 million for Thai.

By selling the assets to Tyson for only $ 360 million, the BRF will sour an accounting loss (not cash) of at least $ 70 million. Receiving less than expected from the sale of its operations in Europe and Thailand, BRF will have to extend the deadline to reach the target of reducing the leverage ratio (ratio of net debt to adjusted Ebitda in the last twelve months) in six months. In the middle of last year, the company announced the goal of achieving a pro forma leverage ratio of 4.35 times in the 2018 balance sheet, which will be released on February 28.

However, the company achieved R $ 4.1 billion with the plan to sell the assets, being just under R $ 2 billion from the sale of assets. In a material fact released on Thursday morning, BRF said the proforma leverage ratio will now be 5 times higher. In September, that index was at 6.7 times. By the end of 2019, the company’s goal was also changed. If before the end result of the asset sale program the company projected to achieve a 3-fold leverage on December 31 this year, now the target is 3.65 times.

In the relevant fact, BRF reiterated “the commitment to declining deleveraging and the lengthening of its indebtedness”. According to the company, the carton remains robust. At the end of the year, it was close to R $ 7 billion, which gives comfort to BRF to continue its restructuring.

Source: Valor Econômico