JBS, the world’s largest beef processor based in Brazil, has announced the sale of some of its largest assets including Northern Ireland poultry processor Moy Park in a bid to pay down the group’s spiralling debts.

The announcement to sell Moy Park comes less than two years after JBS first acquired the Northern Ireland poultry processor in a deal worth €1.3bn. It is likely that JBS will have to take a significant cut on the sale price this time around.

In a statement, JBS said it will sell non-core and less strategic assets including Moy Park, its 19% stake in the Brazilian dairy company Vigor Alimentos as well as the Five Rivers cattle feedlot in the US that has the capacity to finish close to 1m cattle per year.

JBS plan to raise about €1.6bn ($1.8bn) from the sale of these assets in what is undoubtedly a fire sale to shore up the company’s highly leveraged balance sheet.

The announcement to offload these assets follows the recent sale of the company’s beef-processing businesses in Argentina, Paraguay and Uruguay to rival processor Minerva in a deal worth €266m ($300m).

Retrenchment

After years of rapid expansion, the plan to asset strip JBS in a bid to reduce debt highlights how difficult the situation has become for JBS. The company has borrowing in excess of €12.5bn ($14bn) at present, meaning JBS is highly leveraged with a debt-to-earnings ratio of 4.2 times.

However, the recent corruption scandals that have engulfed the Brazilian meat processor have undoubtedly contributed to today’s announcement. Last month, J&F Investimentos, which is the parent company of JBS controlled by the two Batista brothers Wesley and Joesley, agreed to pay €3bn in fines after signing a plea agreement with Brazilian federal prosecutors.

The investigation by Brazilian authorities resulted in seven senior executives at JBS admitting to paying hundreds of millions in bribes to politicians, lawmakers and state officials during a crucial expansion phase for the company. This corruption and bribery scandal has led to a sharp rise in the cost of borrowings for JBS, which are almost completely (92%) denominated in US dollars.