Agribussines:

Brazil Meatpacker Sadia Says Rolling Over Short-Term Debt
By Alastair Stewart
FEBRUARY 2, 2009
SAO PAULO (Dow Jones)--Brazilian meatpacker Sadia (SDA) is successfully managing to roll over its short-term debt, despite the dent caused to the company's status by heavy forex derivatives losses last year, management told analysts during a meeting Friday.
However, the cost of rolling over debt in the current tight market was dramatically higher interest rates. Sadia paid 120% of the interbank rate, which on Monday stood at 12.62%, compared with 80% of the rate before the crisis, management said, according to a report issued by the local Brascan brokerage. Last year, Sadia, Brazil's biggest seller of processed food, announced a nonrecurrent loss of BRL760 million arising from foreign exchange futures positions. The company was caught out by the rapid depreciation of the Brazilian real in the last
quarter of 2008. The local currency dived more than 30%.
The news of derivatives loss rocked the company. On Friday, Sadia investor relations said that 35% of the company's short-term debt comes due in the first quarter of 2009 and the rest in the
second quarter.
Nearly all banks have agreed to lengthen Sadia debt, which is being rolled over abroad at Libor plus 5%, the company management said. In September, Sadia will be obliged to roll over approximately 1.5 billion Brazilian reals ($638 million) in debt but the company has received a
number of refinance offers, it said.
At the end of the third quarter, Sadia registered net debt of BRL4 billion and gross debt of BRL7.7 billion, of which 49% is short term debt.
Sadia executives said there is a possibility that the company will migrate to the Novo Mercado mechanism on the Brazilian Stock Exchange, or Bovespa, which demands rigid corporate governance. This could be the first step towards the emission of new shares to capitalize the company when the market is more buoyant.
Sadia shares have been rising over the past week amid reports that the state-run Brazilian Development Bank, or BNDES, will inject capital into the company or it will become the subject of a takeover from local rivals, such as Perdigao (PDA) or JBS Friboi (JBSS3.BR).
Sadia shares were 2.7% higher at BRL3.41 in late afternoon trade on Bovespa, while the benchmark Ibovespa index was 0.6% lower.