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 fulfill 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.
The improvement from a R$540.0m loss in the same period of last year reflected Marfrig's avoidance this time of a large loss on foreign exchange.
The group's net debt burden swelled to R$9.30bn at the end of September, equivalent to a sizeable 3.9 times historic earnings before interest, tax, depreciation and amortisation (ebitda) even on an underlying basis.
The ratio at the close of June was 3.5 times historic ebitda.
Marfrig shares, which hit R$9.81 in early deals, recovered some ground to close at R$10.28, a decline of 1.6% on the day.