JBS S.A. announced this week that, together with its Brazilian operating subsidiaries and global leather division (JBS Brazil), it has entered into agreements to stabilize approximately 20.5 billion reals of debt for a 12-month period, representing 93% of the principal amount of debt the company has acquired from financial institutions in Brazil and abroad.
“The terms of the agreements will ensure the financial liquidity and regularity of JBS's operations, as they allow for the stabilization of short-term indebtedness and the preservation of the bank's agreements in their original conditions, which is necessary to ensure the stability of JBS's financial profile,” the company said in a securities filing.
During the stabilization period, JBS Brazil will pay in full the interest incurred under the terms of the original contracts, as well as four installments of 2.5% of the principal amount in question, with the first one to take place upon initiation of the agreement and the remaining in 90, 180 and 270 days, respectively. If certain liquidity events occur, such as the sale of equity interests, with the exception of the sale of the beef operations in Argentina, Paraguay and Uruguay announced to the market on June 6, 2017, JBS Brazil will pay back the amount equivalent to 80% of the net proceeds from such liquidity events.
JBS Brazil said it has also entered into an agreement with Itaú Unibanco Group that provides for the renegotiation of debt in the approximate amount of 1.2 billion reals, such that 40% of the total debt will be paid as originally contracted and the remaining 60% will be renewed, under original conditions, for 12 months from the originally stipulated maturities.
The agreements were unanimously approved by the company's board of directors and will be monitored by management, who will keep shareholders and the market in general informed of developments.