Brazil's JBS solicits consents for 9 3/8% notes, 10½% notes

By Jennifer Chiou

New York, Jan. 5 - Brazil's JBS SA announced the start of a consent solicitation for its $275 million of 9 3/8% senior notes due 2011 and its $300 million of 10½% senior notes due 2016.

The company is soliciting consents to allow it to transfer all of the assets and certain related liabilities of its hygiene and cleaning products division, as well as certain other assets that are not directly related to its core beef business, to its newly created affiliate, Flora Produtos de Higiene e Limpeza Ltda., a limited liability company organized under the laws of Brazil and a wholly owned subsidiary of J&F Participacoes Ltda., the parent company of JBS.

JBS is also seeking consents to add a wholly owned subsidiary, JBS Finance, to be organized by JBS as a limited liability company in the Cayman Islands as a co-issuer of the notes.

The solicitation ends at 5 p.m. ET on Jan.23.

For each $1,000 principal amount, JBS will pay $2.50 for those who submit consents prior to 5 p.m. ET on Jan.16 and $1.50 for those who consent after that date but before the expiration.

JBS added that the Flora transaction is part of a corporate reorganization that the company expects will further streamline its corporate structure and focus its operating resources and activities on its core beef business.

Linked to the Flora transaction and the addition of JBS Finance as a co-issuer, JBS, JBS Finance, Flora and the trustee will enter into supplemental indentures, under which Flora will jointly and severally guarantee all of JBS's and JBS Finance's obligations under the notes; JBS Finance will become a co-issuer of the notes and will be jointly and severally liable, together with JBS, for all amounts due under the notes; and JBS Finance and Flora will agree to be bound by certain restrictive covenants.

The company added that the Flora guarantees will terminate and the restrictive covenants applicable to Flora will no longer be applicable, in each case concurrently with an increase in JBS' total share capital and additional paid-in capital in an aggregate amount not less than the reduction of the total shareholders' equity of JBS as a direct result of the Flora transaction.

Sao Paulo, Brazil-based JBS, also known as Grupo Friboi, is the fourth-largest beef company in the world in terms of live cattle slaughtering capacity and the largest beef processor and exporter in Brazil and Latin America as measured by revenues.

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