S&P affirms JBS, National Beef

Standard & Poor's said it affirmed the B+ long-term corporate credit rating on JBS SA following the company's bid to acquire National Beef Packing Co. LLC's capital for $970 million and Smithfield Beef Processing, of Smithfields Foods Inc., for $565 million, as well as Tasman Group Service Pty Ltd. and Industry Park Pty Ltd. for $150 million.

The outlook remains negative.

S&P also affirmed National Beef's B+ long-term corporate credit rating with a negative outlook. The agency said it expects the $160 million 10½% notes to be repaid at the close of the deal.

The BB+ long-term corporate credit rating on Smithfields Foods remains on CreditWatch with negative implications, where it was placed on Dec. 3.

The affirmation reflects expectation that the acquisitions will not affect the company's financial profile, considering the $1.7 billion acquisition will be paid with cash reserves and a private equity infusion of $1.5 billion.

S&P said it expects JBS's ultimate business profile to improve because of a much stronger market position and greater scale in the U.S. beef industry.

JBS's capital structure could remain highly leveraged in the next several years, the agency said, with a total debt-to-EBITDA ratio between 4 times and 5 times.

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