BRF gains momentum with R$ 4.5 billion from Marfrig and Arab fund – 05/31/2023 – Market

The shares of BRF, owner of the brands Sadia and Perdigão, closed the session on the Stock Exchange with a sharp increase this Wednesday (31), after the announcement of a possible contribution of up to R$ 4.5 billion from the Arab fund Salic (Saudi Agricultural and Livestock Investment Company) and Marfrig in the company.

BRF’s common shares soared 11.83% on B3, to R$ 8.13, being the second highest among the shares that make up the Ibovespa, while Marfrig’s common shares, which is BRF’s largest shareholder, rose 6, 24%, at BRL 6.64. In the opposite direction, the Ibovespa retreated 0.58%, to 108,335 points.

The news brings breath to BRF shares, which have accumulated a devaluation of around 2% in the year and almost 46% in the last 12 months. Marfrig’s shares suffered an even greater drop in the year, of more than 23%, and of 46% in the last 12 months.

Refrigerators face a period of poor performance, with the market being negatively surprised by the results presented in the first quarter. Specifically speaking of BRF, the generation of free cash flow was negative by R$ 1.2 billion from January to March, according to a report by Goldman Sachs. The company’s leverage, that is, the ratio of net debt and operating income, increased from 2.8 times to 3.4 times in one year.

In this scenario, the company has been looking for ways to raise capital and improve its cash flow. At the end of February, BRF communicated to the market that it hired Santander to advise on the separation process of its pet food division.

In BRF’s material fact released this morning, Salic presented the company with a commitment to subscribe up to 250 million new shares through a primary public offering, at an amount that does not exceed R$ 9 per share. With this, the fund can inject up to R$ 2.25 billion into the company.

One of the conditions for the contribution is that Marfrig, which holds 33.27% of BRF’s shares, and therefore is the company’s largest shareholder, also undertakes to subscribe up to 250 million new shares within the same price limit. That is, in total, BRF can receive up to R$ 4.5 billion.

If in fact the primary public offering takes place, Marfrig’s stake in BRF will increase to 38.3%, while Salic will become the company’s second largest shareholder, with 15.7% of total shares, according to calculations by manager L4 capital for Sheet.