News

07/12/2018 15h55

BRF signs agreement for sale of assets in Argentina and in Brazil (Várzea Grande)

BRF has entered into an agreement with Marfrig for the sale of shares in QuickFood, the leading producer of beef products in Argentina, the owner of the brands Paty and Vieníssima! and a producer of cold cuts and frozen vegetables. The two companies also entered into a five-year partnership for the production and distribution of beef patties, meatballs, kibbeh and other products at the plant in Várzea Grande, a city in the Brazilian state of Mato Grosso.

The total transaction is worth approximately R$334 million, of which US$60 million (or R$234 million) is related to the sales of assets in Argentina and the remaining R$100 million is related to the sale of the assets in Mato Grosso. The amount is subject to adjustments upon the conclusion of the transaction, since the portion related to the net debt of QuickFood recorded at year-end will be deducted from the agreement just executed.

In addition to supporting BRF’s achievement of the R$5 billion target established in its Operational and Financial Restructuring Plan announced in June, the partnership with Marfrig will have a positive impact on the results of BRF’s processed beef products segment. The agreement signed by the two companies establishes that Marfrig will assume operations at the plant in Várzea Grande to produce beef patties and other beef products, which will continue to be distributed and sold under BRF’s brands. The partnership also provides for initiatives in the area of innovation and for the development of new beef patty lines.

 “With this deal, we take an important step forward in BRF’s deleveraging process, in line with our previously announced divestment plan. The partnership with Marfrig will yield benefits for the operations and profitability of both companies and ensure the production of high quality products for our consumers,” said BRF COO Lorival Luz.

To date, BRF’s divestment program has resulted in the sale of assets worth R$822 million, considering the transactions effectively executed. The company’s target is to achieve a pro forma net leverage ratio (Net Debt/Adjusted EBITDA) of 4.35 times by December 2018, considering the transactions envisaged in the aforementioned restructuring plan. The proceeds from the transaction announced today, as well as the proceeds from the transactions already executed, will be used in full to repay liabilities coming due in the first quarter of 2019.

The transaction already has been approved by BRF’s Board of Directors and is subject to the fulfillment of certain conditions precedent.

The following table shows the status of the transactions in BRF’s Restructuring Plan:

BRF – R$5 BILLION MONETIZATION PLAN

Initiatives

Status

Divestment of Non-Core Assets*

R$214 million

Working Capital*

R$274 million

Divestment of assets in Argentina + Várzea Grande (MT)

R$334 million

TOTAL

R$822 MILLION

*position at 3Q18