Sadia's chairman and vice-chairman resign after US$346 million  loss

Sadia Chairman Walter Fontana Filho and Vice Chairman Eduardo Fontana d'Avila resigned days after the company announced it lost 760 million Brazilian reals (US$345.9 million) on foreign exchange futures positions.

 

Sadia, Brazil's main meat exporter, announced the resignations after a special board meeting Monday.

The company said the resignations were due to "private reasons."

 

Luiz Fernando Furlan will be Sadia's new chairman, but the vice chairman position would not be replaced.

 

Sadia's finance director was also fired.

Sadia's losses was in part due to the Brazilian real weakening against the US dollar: the real has depreciated against the dollar by more than 25 percent over the past month.

 

Sadia's credit rating was also lowered by  Standard & Poor Monday.

"The downgrade reflects the weakening of the company's credit metrics after it faced losses in unwinding certain derivative transactions in third-quarter 2008," said Standard & Poor's credit analyst Milena Zaniboni in a news release.
 

Sadia's losses have been criticised by Brazilian president Luiz Inacio Lula da Silva.

 

Until recently, Lula has insisted that the financial crisis would not spread over into Brazil due to strong reserves, discoveries of oil and the de-linking of the US and Brazilian economies.

 

Brazil began to feel the effects of the crisis in September when exporters found they could no longer get loans as international banks and financiers cut off credit lines.

 

The situation worsened as the dollar shot up in value against the real.

           

The Sao Paulo stock market plunged daily, with trading being suspended twice on the same day as the Ibovespa index fell 15 percent.

 

Sadia announced the losses on the same day that pulp and paper company Aracruz announced losses of 1.9 billion reais (US$ 823 million) also due to hedging operations.

 

Lula accused the two companies of speculating against the real.

 

He has also given the Central Bank a free hand in reacting to the crisis. The Central Bank has adopted a number of measures such as providing "loans" to exporters through sales of dollars