Darkness deepens for Independência
03/03/2009
Troubled Brazilian packer company Independência is reported to have filed for bankruptcy protection.
The company said at the end of last week that it had halted slaughter at its abattoirs. On March 2, it said it had taken steps to protect itself from creditors after a decline in beef exports left it with what it called a crippling debt burden.
It said it had around $1.2 billion of debt, around $575 million of it in Brazil and $525. The company employs 11,300 people, 96% of them in Brazil.
Brazilian media have quoted Tobias Bremer, the company’s finance director, as saying that five factors have led Independência to this situation. He said livestock farmers demanded cash on delivery of their cattle, while Independência’s customers had asked it for easier payment terms. He also said demand from outside Brazil for Independência beef had dropped significantly in the past few months.
Another factor, according to Mr Bremer, is that, while beef prices have been dropping, the price of livestock has remained steady. The fall in beef prices, reflecting lower demand (at home as well as overseas) has led to something of a price-war, he added.
All these things combined have put the company into a financial crisis.
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