June 29, 2018 / 5:04 PM / 21 days ago

Brazil's BRF aims to raise $130 million from non-core asset sales

SAO PAULO (Reuters) - Brazilian food company BRF SA (BRFS3.SA) aims to raise about 500 million reais ($130 million) from non-core asset sales to cut debt amid rising feed costs and new barriers to the European Union, management said on Friday.

FILE PHOTO: Meatpacking company BRF SA's logo, which is one of the biggest food companies in the world, is pictured in Lucas do Rio Verde, Mato Grosso state, Brazil, July 27, 2017. REUTERS/Nacho Doce

BRF is preparing to sell assets including forestry land and real estate, said Eduardo Takeiti, head of investor relations, during a presentation for investors and analysts. He dismissed speculation that the company was considering a capital increase as a strategy to raise cash and cut debt.

Takeiti left open the possibility of also selling core assets if BRF cannot circumvent an EU trade ban and improve profit margins, which have suffered from higher feed costs and an investigation into bribery of food inspectors.

“A decision on whether to sell core assets has not been made,” he said, adding that BRF’s preference is to reduce debt “organically” by boosting cash from operations.

The asset sale strategy marks the latest attempt to turn around the world’s largest chicken exporter after two straight annual losses sparked a boardroom rift and a management reshuffle.

Takeiti said the tough operating environment had made it unlikely that BRF would reach its previous goal of reducing net debt to 3 times earnings before interest, taxes, depreciation and amortization (EBITDA) by year-end.

BRF’s leverage ratio was 4.4 times EBITDA at the end of the first quarter, when net debt was 14 billion reais, according to Takeiti’s presentation.

Reporting by Ana Mano; Editing by Christian Plumb and David Gregorio

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