Minerva SA [BEEF3:BZ] is negotiating with Fosun International [0656:HK] regarding an investment in Minerva’s food unit Chile-based Athena Foods, as reported by Bloomberg on November 9. Athena Foods plans for an IPO on the Santiago Stock Exchange, Chile. The IPO is expected to take place within 12 months, with an estimated proceed of USD270m. The IPO plan will be preceded by a capital injection into Athena Foods and Minerva's holdings in Paraguay, Uruguay, Argentina, and Colombia.
Minerva SA is one of the South American leaders in the production and sale of fresh beef and its byproducts, as well as live cattle exports. Minerva has revealed its 2Q18 financial report showing a negative value of shareholder’s equity and the net debt to EBITDA ratio, which measures the company’s ability to repay its debt, has increased to five. The ratio higher than four or five typically set off alarm bells because this indicates that a company is less likely to be able to handle its debt burden. Given the situation, Minerva would take as much as five years to pay back its debt if the net debt to EBITDA ratio held constant. The IPO plan for Athena Foods is one of two strategies to improve Minerva’s capital structure, which would allow Minerva to increase future dividends payout.