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Marfrig Alimentos SA (MRFG3)’s bonds slumped the most since September as Valor Economico reported that the beef producer is in talks to postpone an interest payment to Brazil’s state-owned development bank.
Yields on the company’s dollar bonds due in 2018 jumped 120 basis points, or 1.2 percentage points, to 15 percent today in New York. Shares fell as much as 4.5 percent today before climbing 7.6 percent to 9.38 reais. The stock plunged 5.1 percent yesterday.
Sao Paulo-based Marfrig is seeking to delay a payment of as much as 270 million reais ($134 million) due in July until 2015, according to Valor, which didn’t say where it got the information. Ricardo Florence, a Marfrig investor relations director, said on a May 15 conference call that the company was seeking to renegotiate interest payments on convertible bonds when asked whether there had been negotiations with the state development bank. A Marfrig official declined to comment today.
“Marfrig has significant debt and it’s causing concern among investors,” said Flavio Combat, an economist at Concordia Corretora in Rio de Janeiro. A possible debt payment postponement “is a bad sign that confirms the perception that the market had. What happens now depends on the government,” he said.
The loan terms haven’t changed, BNDES, as the development bank is known, said in an e-mailed response to questions.
Marfrig, which is looking to shed assets to curtail surging debt, last month completed the sale of U.S. and European distribution units to Illinois-based Martin-Brower Co. for $400 million.
Chief Executive Officer and founder Marcos Molina dos Santos, who opened his first slaughterhouse in 2000, is using acquisitions to transform Marfrig into a diversified food maker as China-led demand for grains used to feed livestock increases costs for meatpackers. The company spent $2 billion in 2010 to buy Seara Alimentos from Cargill Inc. and McDonald’s Corp. supplier Keystone Foods, causing debt to quadruple in two years.
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