Fitch Comments on Marfrig's Proposed Sell-Off

  Fitch Comments on Marfrig's Proposed Sell-Off

Business Wire

NEW YORK -- June 12, 2013

Fitch Ratings views positively Marfrig Alimento S.A.'s (Marfrig) announcement
that it will sell to JBS S.A. (JBS) certain Seara assets. This transaction,
which is subject to the approval of CADE, the Brazilian antitrust authority,
would result in JBS assuming BRL5.85 billion (USD2.9 billion) of Marfrig's
bank debt with maturities between 2013 and 2017.

Fitch views it likely that the closing of the transaction would result in the
stabilization of Marfrig's ratings at the 'B' category and the removal of its
ratings from Rating Watch Negative. Pro forma for the sale, it is expected
that Marfrig's net debt-to-EBITDA ratio would decline to about 3.5x from its
current level of 5.1x as of March 31, 2013. While Marfrig would have lower
leverage, it would also have significantly less product and geographic
diversification. As a result, the importance of Marfrig's more volatile
protein business would increase.

Uncertainties remain regarding Marfrig's strategy for managing and growing its
remaining businesses. In Fitch's opinion, the potential for additional asset
sales exists. In the current transaction, Marfrig is selling its Seara Brazil
(Seara) business, an asset which until recently was considered of strategic
importance to the company. Marfrig purchased Seara from Cargill in 2009 for
USD900 million. Marfrig more than tripled Seara's business, from USD1.7
billion in revenues and USD76 million of EBITDA in 2009 to about USD4.5
billion in revenue and estimated pro forma EBITDA of USD300 million in 2012.
The addition of some assets from BRF S.A. (BRF) in the middle of 2012 was key
to this growth, as it more than doubled Seara's production capacity.

Fitch currently rates Marfrig as follows:

Marfrig Alimentos S.A.

--Local currency IDR 'B';

--Foreign currency IDR 'B';

--National scale rating 'BBB'(bra)';

--BRL300 million 3rd debentures issue (1st tranche) 'BBB'(bra)';

--BRL300 million 3rd debentures issue (2nd tranche) 'BBB'(bra)'.

Marfrig Overseas Ltd

--Foreign currency IDR 'B';

--US$375 million senior unsecured notes due 2016 'B/RR4';

--US$500 million senior unsecured notes due 2020 'B/RR4'.

Marfrig Holdings (Europe) B.V.

--Foreign currency IDR 'B';

--USD600 million senior unsecured notes due 2017 'B/RR4'.

--USD750 million senior unsecured notes due 2018 'B/RR4'.

All ratings are currently on Rating Watch Negative.

In accordance with Fitch's policies the issuer appealed and provided
additional information to Fitch that resulted in a rating action that is
different than the original rating committee outcome.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology'

--'Parent and Subsidiary Rating Linkage'

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Parent and Subsidiary Rating Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685552

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Contact:

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Director
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or
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Director
or
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