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Tough Times for Independência

04 March 2009

BRAZIL - Brazilian meatpacker Independência Alimentos Ltda - the third largest meat processor in the country - has filed for protection from creditors under the local equivalent of the US Chapter 11 bankruptcy law.

The company made the filing with a local court in Cajamar city, in the state of Sao Paulo, where the company is based.

In a presentation to investors, the company said that the company is suffering from "severe negative impacts both on the operational and financial sides."

It said it has had a drop in beef demand from the main importing countries, leading to oversupply and the redirecting of export volume to the Brazilian market has produced sever competition and falling prices.

The company has experienced falling prices in all markets, while cattle prices have been stable, so that beef prices are not compatible with the cattle price.

The company has also face non-payment of bills from several quarters.

The global reduction in liquidity has also hit the company, which has seen financial deals cancelled. The company has also been hit by a reduction in short term financing to 30 days and an increase in financing costs.

A devaluation of the Brazilian Real has also increased their debt.

"This liquidity crisis places the company at risk and faced with negative operational results," the company said in its presentation.

The company added that it was freezing all non-essential investments and expenses in the face of the a total absence of working capital and export financing.

The company had reduced slaughter during December last year to avoid high cattle prices.

It added that there had been a strong increase in slaughter during January resulting in a decrease in cattle prices at the beginning of the year.

However, there are expectations that export demand will increase and prices will also increase.

TheCattleSite News Desk



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