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Minerva wants to resume dividend payments

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Dividend time is near for Minerva Foods, South America's largest beef exporter. After a decade of growth supported by debts, and thus remunerating creditors, the company announced a stock offering of R$1.4 billion. With the proceeds, it intends to reduce the debt quickly, something that could enable dividend payment to shareholders already this year, sources say. The company declined to comment.

With R$767 million in negative net worth, Minerva paid dividends last in April 2017. It was R$60.1 million related to the prior year's earnings. Since then, the company only had losses, caused by the debt taken on to acquire meatpackers in South America and also by the impact of currency devaluation on its foreign-currency-denominated debt. In the first three quarters of 2019, Minerva had a loss of R$227 million.

Yet the expectation is that this situation will change with the capital increase. Of the total R$1.4 billion, the company will take R$1.1 billion. The rest will go to the Vilela de Queiroz family, which will sell 15 million shares. The total offering is of 95 million shares (80 million new shares will be issued). It is expected to be completed by early February.

The share offering, communicated Wednesday night, buries the plan for taking subsidiary Athena Foods public on the Santiago stock exchange in Chile. Athena Foods gathers Minerva's operations outside Brazil. The IPO, which would inject more than R$1 billion in the group, was already at risk.

Minerva postponed Athena's IPO last May because of adverse market conditions, and late in the year the political crisis in Chile and the election of Alberto Fernández as Argentina president soured the investors' mood. The Mercosur country accounts for a third of Athena's sales. Altogether, Minerva has R$18 billion in annual sales, of which Athena accounts for about 40%.

By issuing new shares in Brazil, Minerva circumvents the hurdles for an IPO in Chile and also increases liquidity of its stock on B3, the Brazilian exchange, since the Vilela de Queiroz family, which controls the company, will sell part of its shares in the offering. Since investor interest in Minerva already was growing, as a result of...

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