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Brazil’s JBS shuts 7 plants after $230 mln asset freeze | KTIC Radio

Brazil’s JBS shuts 7 plants after $230 mln asset freeze

SAO PAULO, (Reuters) – Brazilian meatpacker JBS SA shut down seven slaughterhouses in Mato Grosso do Sul after a court-ordered asset freeze affected its operations in Brazil’s second largest cattle-producing state, a press representative said on Wednesday.

The world’s largest meatpacking company said in an emailed statement that the plants would stay closed until the matter is resolved.

The asset freeze, which affects JBS SA and the group’s holding company J&F Investimentos, is related to an investigation into alleged tax irregularities. According to JBS financial statements, the case revolves around tax benefits given to the company by the state of Mato Grosso do Sul.

Shares of JBS fell as much as 3.6 percent during the day following news of the plant closures, but bounced back to 8.15 reais, a 1.45 percent drop from Tuesday’s close.

The company, whose owners face corruption and insider trading charges, said a combined 730 million reais ($230.64 million) had been frozen by a lower court in the state.

JBS said it was working to restore operations and maintain 15,000 direct and 60,000 indirect jobs in the state of Mato Grosso do Sul. It will continue paying employees normally, the statement said.

Laucidio Coelho Neto, president of cattle ranchers association Acrissul, said there would be oversupply in the state as other meatpackers there are not big enough to purchase the available animal stock.

Still, he did not expect the shutdown to affect beef flows to export markets, explaining Brazil was a large supplier and production can be redirected, including by JBS, to plants in other states.

Brothers Wesley and Joesley Batista, owners of JBS, were arrested last month in connection with insider trading and other offenses related to their plea deal.

Wesley, the elder of the brothers and also JBS’s former chief executive, quit his position and has been replaced by his father José Batista Sobrinho.

With the plant closures, the price of the arroba (15 kg) fell to around 130 reais, 4 percent lower from the levels earlier in the week, said Lygia Pimentel, a director at consultancy Agrifatto.

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