tuesday, 30 july of 2013

OppenheimerFunds Sues JBS, World´s Largest Meatpacker, Over Unpaid Loan

OppenheimerFunds x Sues JBS

OppenheimerFunds Sues JBS, World's Largest Meatpacker, Over Unpaid Loan

U.S.- based OppenheimerFunds Inc. is suing the world's largest meat processor, Brazil's JBS SA, over an unpaid loan originally signed in 2008 by French poultry producer Doux SA, Oppenheimer's Brazilian lawyer said Monday.

Oppenheimer, with more than $208 billion in assets under management, is the major creditor on a $100 million loan given to the Brazilian unit of French-based Doux SA, Frangosul, which in 2012 leased its local units to the Brazilian meatpacker for 10 years with an option to buy, said Fernando Bilotti Ferreira, a lawyer at Santos Neto Advogados, which represents Oppenheimer in Brazil.

The lease includes a plant based in Passo Fundo, in the south of Brazil, which serves as collateral for the loan.

"OppenheimerFunds and its legal advisers believe that the lease agreement between JBS S.A. and Doux Frangosul on the Passo Fundo plant clearly breaches the 'Alienacao Fiduciaria' [mortgage] granted over it," OppenheimerFunds said in an email to Dow Jones Newswires.

Doux halted the payments on the loan much before the leasing was signed and currently owes around $75 million on it, including principal and interest, according to Mr. Ferreira.

JBS leased all the plants and took on former employees from Frangosul, the Brazilian company controlled by Doux, disguising the fact that it was, in essence, "incorporating" the company, Mr. Ferreira said in a telephone interview.

A spokesman for JBS declined to comment. A lawyer for Doux in Brazil wasn't immediately available.

Under the lease agreement signed in 2012, JBS said that it wouldn't take on any of Frangosul's liabilities. However, it would take on such liabilities in the event of an outright purchase.

JBS also said, at the time, that it would invest 300 million Brazilian reais ($133 million) in Frangosul's operations and that it would create a new business unit named JBS Chicken Brazil.

The meatpacker noted then that it planned to continue employing all of the 6,000 workers at Doux's Frangosul unit in Brazil and that it would maintain existing contracts with third-party service providers.

Oppenheimer and its lawyer said, however, that creditors were provided with no details on the lease agreement and that it was signed after Doux was already in default.

The U.S. company noted that Brazil's government-run development bank, the BNDES, is a JBS shareholder.

"The fact that JBS is partially owned indirectly by the Brazilian government further exacerbates OppenheimerFunds' concern and frustration, as it is unclear to us whether the government has notice of and supports such questionable legal practices," Oppenheimer said in the statement.

BNDES owns 19.85% of JBS while another government-run bank, Caixa Economica Federal, has a 10% stake in the company, according to information provided by the meatpacker on its website.

BNDES declined to comment. A spokesperson for Caixa wasn't immediately available for comment.

(Published by The Wall Street Journal – July 29, 2013)

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