BNDES studies measures of support to cold-storage houses, including support to mergers
Folha de S. Paulo 03/20/2009
The President of the BNDES (Brazilian Development Bank), Luciano Coutinho, said the bank is studying measures of support to the cold-storage house sector, which may be announced in April. Coutinho avoided mentioning specific cases of companies, but he affirmed the bank may provide support to the purchase of one company by another. Six cold-storage houses have filed for court-supervised reorganization. Independência is the first large-size one. The others are Arantes, Frigoestrela, Margen, IFC and Quatro Marcos. The BNDES has suspended the second stage of an investment of R$ 200 million (US$ 87 million) foreseen for Independência because the company did not meet the requirements of the bank. The world crisis, which caused a fall in the demand and reduction in the exports, was one of the main reasons of the cash bottlenecks of the cold-storage houses. The narrowing of the margin, however, also had weight in such lack of liquidity of the cold-storage houses and it originated prior to this crisis. The narrowing of the margins is being announced for two years, due to the opening of the cycle of high prices of beef cattle. "While we pointed to a turn in the price of meet, the cold-storage houses adopted bold strategies of growth. That was a reckless policy", according to José Vicente Ferraz, technical director of AgraFNP. The high in the price of beef cattle increased the costs of the cold-storage houses, which were not able to transfer the prices to the consumer, mainly due to the concentration of the sales to a few supermarket chains.