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JBS hopes New York listing will give access to cheap credit

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JBS, the Brazilian beef giant, will list in New York in a bid to tap into supplies of cheaper credit.

The R$162.9bn (US$47.75bn) group, which owns the Swift, Pilgrim's Pride and Moy Park brands, is the world's biggest meat packer.

Listing in New York "will increase its access to international financial markets, improving the liquidity for its shares, with the prospect of reducing its cost of capital," JBS said in the statement.

New York listing

Subject to regulatory and shareholder approval, the business is planning to transfer its international operations into a new business, JBS Foods International, which would be based in the Republic of Ireland (The Moy Park chicken operation is located in Northern Ireland) but with a listing on the New York stock Exchange.

JBS Brasil, with its beef, tannery and biofuels interests, would remain traded on the domestic exchange.

JBS has grown rapidly over recent years, with the purchase of the Moy Park operation from its fellow Brazilian meat processor Moy Park and more recently, Cargill's pigmeat processing business in the USA, racking up hefty dollar denominated debts in the process.

High interest rates, an ongoing political crises, and a moribund economy make credit expensive to come by in Brazil.

Trading loss

JBS also reported a R$2.74 trading loss in the three months ended March 31st 2016, compared to a profit of R$1.39 in the same period last year, on revenues that were up 30% to R$43.91bn.

Profitability was impacted by the underperformance of its JBS USA Beef division (which includes activities in Australia and Canada).

The business was affected by the lower market prices achieved than paid for cattle supplies bought forward in North America, together with a shortage of beef animals to process in Australia and the Aus$: US$ exchange rate.

However the JBS USA Pork division saw revenues increase by 68%to US$1.26bn, despite lower market prices, following the Group's acquisition and integration of Cargill Pork.

By Jamie Day

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