Minerva BEEF3 announces plans to reduce debt after a significant acquisition of Marfrig’s assets valued at 7.5 billion reais. Analysts are concerned about the company’s increased debt levels, operational efficiency, and potential covenant breaches. Despite a challenging environment, Minerva’s stock rose 7.3%.
Executives at Minerva BEEF3, the leading beef exporter in South America, announced the company’s plan to reduce debt following a significant acquisition. This comes after the company agreed to pay approximately 7.5 billion reais ($1.33 billion) for assets from competitor Marfrig MRFG3. Analysts have expressed concerns regarding Minerva’s heightened debt levels and operational efficiency with the new assets.
The challenges facing Minerva are compounded by regulatory approval delays that extended beyond expectations, alongside an unfavorable Brazilian cattle cycle. These factors could impact the company’s immediate performance post-acquisition, as highlighted by analysts. Despite these difficulties, Minerva reported a 7.3% increase in its stock price during early trading.
In terms of finances, Minerva’s net debt was recorded at 15.6 billion reais at the end of the fourth quarter, marking a 75.9% increase compared to the same quarter last year due to loans taken for the acquisition. Analysts Igor Guedes and Luca Vello from Genial Investimentos noted that unfavorable foreign exchange rates contributed significantly to the company’s gross debt, leading to concerns about potential breaches of debt covenants that could curtail dividend payments and new borrowing.
In summary, Minerva is committed to reducing its debt following a major acquisition, despite facing significant operational and market challenges. With heightened debt levels and concerns regarding cash flow, analysts are cautious about the company’s immediate future. Nevertheless, the rise in stock value indicates investor confidence, although the company’s financial health will be closely monitored going forward.
Original Source: www.tradingview.com
