BNDES Heard Eating Jumbo Marfrig Convert

Marfrig will hold a meeting June 30 to ask shareholders to approve a BRL2.5bn convertible debenture issue to pay for US-based Keystone Foods. Itau equity analyst Juliana Rozenbaum says the buyer of the notes will most likely be development bank BNDES, but neither party confirms this. The bonds, offered privately to existing investors, are mandatorily convertible into equity after 5 years and would pay interest at the DI rate plus 1%, Marfrig says. The proposed conversion price will be BRL21.50 adjusted by CDI+1%, and for dividends and other payments. If the adjusted price is greater than market, the conversion price reverts to the market price, with a floor of BRL24.50. Additionally, Marfrig’s board has authorized the company to set up and ADR program in the US OTC market to expand access to investors, particularly those living outside of Brazil, and to increase the liquidity of its shares. Each ADR will be equivalent to one common share. The ADR program will not entail the issuance of new shares, the Brazilian meat producer says. Deutsche Bank will act as depositary and Itau Unibanco will be custodian.