October 16, 2012

Brazil beef processor Rodopa Alimentos acquired by consultancy

Brazilian beef processor, Rodopa Alimentos, is sold for about US$100 million to a consultancy run by a former chief executive of JBS SA.

The buyout includes the assumption of Rodopa's debt, totalling US$78.3 million, which should be paid by the company following this injection of new cash. New shareholders will not inject additional new cash to pay the debt.

Management buyouts are unusual in Brazil, and consist of a company being acquired by its own officers, in this case the main shareholder being executive director Sergio Longo, a former chief financial officer for JBS, and his company Selo Consultoria, which specialises in bankruptcy restructuring for meat processors.

Rodopa's new ownership will aim to lengthen its debt and increase the role exports play in revenue. The company reported a net debt of US$71.7 million in the second quarter, 80% of which was short term. About 20% of Rodopa's sales now come from beef exports.

The company generated sales of US$371.6 million from January through September, up 21.1% from the same period a year ago. Rodopa will aim to double its current beef slaughter capacity from 3,000 head per day to 6,000, through the acquisition or lease of two new slaughter facilities, preferably deciding on sites before the year ends.

The company now has four cattle slaughterhouses, in Ipuã and Santa Fe do Sul, Sao Paulo state, Goiás, Goias state, and Cassilândia, Mato Grosso do Sul state, as well as a food-service portioned cuts plant in Cajamar, Sao Paulo.

Coordinated by South Africa's Standard Bank, the acquisition comes with an annual interest rate of 12.5%, and bonds maturing in 2017. Rodopa and its former private family ownership had been seeking a foreign investor or buyer since last year though negotiations moved slowly in the first half of the year due to the global economy.