BRF Completes Operational and Financial Restructuring Plan with Sale of Assets in Europe and Thailand

BRF today signed a contract for the sale of its units in Thailand and Europe for $ 340 million to Tyson International Holding Company. As a result, the company closed the asset divestment process that was part of the monetization plan announced in June last year. 

Today’s announcement, together with the sale of the operation in Argentina and real estate assets, in addition to the funds obtained through FIDC (investment fund in credit rights) and reduction in inventories, totaled R $ 4.1 billion, or 81% of a target of R $ 5 billion initially established. 

The main impact of this result is a delay of about six months in reaching the previously established leverage targets. The company’s new forecast for the end of 2018 (proforma) is a debt equivalent to about 5x EBITDA (operating cash flow), which is down from the 6.74x registered in September 2018. By 2019 , the expectation is that the debt will continue to be reduced and end the year at 3.65x EBITDA.

“With the completion of the sale of assets, we have consolidated BRF’s debt reduction trajectory, which is our priority financial objective,” says Lorival Luz, COO Global of BRF. “We also have a solid cash position, which combined with refinancing operations and new loans already signed, fully equate debt commitments in 2019.” 

In addition to cash inflows, the divestments carried out have other positive impacts for the company, such as the closing of loss-making operations, greater management focus, an asset base better suited to current operating conditions, and a reduction in the depreciation account. 

According to data not yet audited, cash at the end of December 2018 was approximately R $ 6.9 billion, more than enough to cover the R $ 4.256 billion of debt repayments scheduled for 2019. In addition, in the first half of 2019, BRF will receive payment of divestment operations already announced, and there will be positive free cash generation throughout the year. In addition, BRF will begin the second phase of the debt management program ( liability management) with the objective of lengthening the term and reducing its cost, which will allow 2019 to close with a cash position of more than R $ 5.7 billion . 

The completion of the monetization plan will enable the company to focus on business operations and management in markets such as Brazil and the Middle East, which have been defined as strategic planning priorities for the next five years. 

About BRF

BRF is one of the largest food companies in the world, with more than 30 brands in its portfolio, including Sadia, Perdigão, Qualy, Paty, Dánica, Bocatti and Vienissima. Its products are marketed in more than 150 countries, on five continents. More than 100,000 employees work in the company, which maintains more than 50 factories in eight countries (Argentina, Brazil, UAE, Netherlands, Malaysia, UK, Thailand and Turkey).