Judiciary Vetoes Plan to Sell JBS Corporation Business Units

06/22/2017 - 09h13

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RENATA AGOSTINI

FROM SÃO PAULO

The judiciary halted a plan by JBS Corporation's owners to deal with the crisis in the company's reputation. In a decision released on Wednesday (the 21st), federal judge Ricardo Leite, from the Federal District, vetoed the sale of business units from the corporation to rival Minerva.

The operation would have raised around R$ 1 billion (US$ 303 million). The company will appeal the decision.

The agreement with its competitor was the first step in a program to sell JBS business units with the objective of raising at least R$ 6 billion (US$ 1.82 billion). In the midst of a corruption scandal, the company, whose debt level is close to R$50 billion (US$ 15.15 billion), is facing a tightening of credit.

Judge Ricardo Leite's understanding is that a decision to green light the sale would be "premature" considering the "fragility of the evidence presented" so far in the company's plea bargain.

Joesley Batista, Wesley Batista and five other executives of J&F Holding Company have reached cooperation agreements with the General Federal Prosecutor in which they have detailed the payment of bribes to hundreds of politicians, among them, President Michel Temer.

Leite said that they need to provide further clarifications regarding business dealings with BNDES, which has invested R$ 8 billion (US$ 2.42 billion) in the group's international expansion.

The judge also pointed out that the agreement needs to be analyzed by the full Federal Supreme Court and that he needs to wait for the deliberation of the tribunal .

The decision is a major setback for the Batista brothers. It not only invalidates the implementation of the current agreement but also creates major uncertainty for those potentially interested in other units of the group.

The conglomerate has agreed to the terms for payment of a R$ 10.3 billion (US$ 3.12 billion) fine in accordance with the plea bargain and in order to pay the installments has placed business units up for sale.

Translated by LLOYD HARDER

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