Stable Outlook for JBS SA and JBS USA30 August 2013
BRAZIL - Standard and Poor's rating agency has reaffirmed the BB rating of JBS SA and JBSA USA with stable outlook.
After the announcement of the acquisition of the operations of Seara in Brazil on 10 June, S & P had placed the company and its subsidiary JBS USA under observation with an initial negative outlook.
However, now the agency has reaffirmed the risk rating with a stable outlook.
According Flavia Bedran, credit analyst at S & P, the reaffirmation of the risk rating of the company reflects the agency view that the acquisition of Seara will be successfully completed, which includes the extension of maturities of the debt assumed from Marfrig, as well as the expectation that JBS SA will be able to improve both operations and cash flows of Seara.
Another important factor for the improvement in risk classification of JBS, according to S & P, is the consolidation of the company's business and strengthening of its portfolio with the acquisition of Seara.
The agency also notes that the geographical diversification and portfolio JBS has proved successful.
S & P also expects the JBS incorporates Seara successfully, based on a positive trend seen in other acquisitions by the company.
"The stable outlook reflects our view that the company will reduce its leverage gradually improving its cash flow in all business units and decreasing its debt, as it must generate a free cash flow from 2014.
“We also believe that the Company will be successful in improving the operational performance of Seara, as well as in maintaining adequate liquidity through refinancing of debt assumed in the acquisition."
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