Brazilian meat processor JBS resumed talks with prosecutors on Monday over a possible leniency deal after the company’s shares lost one-third of their value and the credit rating agency Moody’s downgraded its debt.
Investors sold off JBS stock after a Friday deadline passed for the company’s controlling shareholders to agree to pay a BRL11.2bn ($3.4bn) fine by Brazilian authorities to settle charges the company made illicit payments to politicians.
The world’s largest meat processor is at the center of Brazil’s latest political scandal, after a recording was made public of a conversation between President Michel Temer and JBS Chairman Joesley Batista in which the Brazilian leader appears to endorse the payment of bribes.
JBS is also under investigation by Brazil’s market regulator CVM for possible insider trading by some of its controlling shareholders.
In a statement on Monday, J&F investimentos, JBS’ controlling shareholder, said the company was meeting with prosecutors this week to continue talks over a possible leniency deal. J&F said it had hired the law firm Trench, Rossi and Watanabe to lead the negotiations. The company did not give a time frame outlining how long the talks might last.
Prosecutors are seeking BRL11bn in penalties, while J&F has proposed paying BRL1bn.
The developments continued to worry investors and the company’s shares fell to BRL5.98, their lowest close since June 2013.
On Monday, Moody’s downgraded JBS’ rating one notch to Ba3. The rating agency cited increased risks related to “potential future litigation cases, governance of the company and liquidity, on which there is currently limited visibility.”
Moody’s also said it was putting the company under review for future cuts, which would threaten JBS’ investment grade status.