Shares in Marfrig Alimentos extended their losses this week to 19% after the meat and foods giant unveiled a R$1.1bn ($540m) cash call, after weeks of speculation of a move to prop up its balance sheet.
Stock in the Brazil-based group, whose empire includes US-based Keystone Foods and UK poultry company Moy Park, fell more than 6% in early deals after it unveiled the sale of new shares "to strengthen the capital structure of the company".
The cash raise – which will offer existing shareholders priority in purchasing the new stock, but no pre-emptive rights - follows weeks of speculation that Marfrig was investigating ways to tackle a debt burden swollen by an acquisition spree, largely during the end of the last decade.
Cash call spree
Only a month ago, the group followed up reports that it was preparing a cash call by saying it was "not preparing any such offering".
Other rumours have included the potential sale of a R$2bn stake to the likes of Blackstone Group or Tyson Foods.
Talk of a share offering revived this week after rival Minerva unveiled plans to raise R$442.1m, ($218m).
Indeed, Marfrig's move represents a cash call to shareholders in the agribusiness sector, with farm operator Black Earth Farming on Monday unveiling an $80m rights issue.
However, while the likes of Marfrig and Minerva have come under pressures from higher feed prices, Black Earth's move was to fund investment to fulfil a supply contract with PepsiCo.
'Adequate capital structure'
Marcos Molina, the Marfrig chief executive, said that the group was "determined to…. obtain a capital structure that is adequate for sustaining our operations over the long term".
The group separately unveiled quarterly results which showed the group returning to the black for the July-to-September period, but by a modest R$10.4m...
Source: Argentine Beef Packers S.A.
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